The £2.66 million bridging finance facility secured by a regional developer from Recognise Bank will be crucial in progressing plans for 66 new homes in Burnage, Manchester. The loan, arranged at 65% loan-to-value, will allow the developer to repay existing charges on the site and release capital for further investment.
The former social and recreational site in Burnage was acquired by the developer in 2023, with planning permission subsequently secured for the extensive residential project. This short-term funding solution is essential for the borrower's strategy, aiming to transition to longer-term development finance as the project advances.
Paul Bagan, lending manager at Recognise Bank, highlighted the importance of this transaction, citing the developer's progress in securing planning permission and the need for a flexible facility that supports their vision. He noted how bridging finance provides crucial interim capital in the property sector, facilitating projects to move forward despite market fluctuations.
This deal comes at a time when the UK property market has experienced significant volatility, with average asking prices falling by 0.9% (or £3,095) in June, according to Rightmove data. Despite such volatility, bridging finance remains a vital tool for developers, offering short-term capital solutions for site acquisitions and refinancing.
For prospective homeowners, particularly first-time buyers in areas like Burnage, new developments of this scale can eventually contribute to increasing housing stock. This could influence affordability in the long term, although current mortgage rates remain a significant factor – the average two-year fixed rate mortgage stood at 5.92% in May, according to Halifax.
Existing homeowners in Burnage might see their property values affected by new developments, depending on the quality and type of housing introduced. Landlords could face increased competition or opportunities, depending on the rental market's absorption of new units. The broader context of stamp duty thresholds and schemes like Help to Buy continue to shape the financial landscape for various market participants.