Bridging Loans News:- Extend planning approvals by a year to avoid current permissions lapsing during the pandemic crisis, urges the construction industry.
The National Federation of Builders, NFB, has put six proposals forward to the government to help the housebuilding sector survive the coronavirus pandemic.
These include exemption from business rates, suspending planning contribution payments and council tax on new build unoccupied or incomplete homes.
NFB chief executive, Richard Beresford, said it was in constant contact with its members so it could put forward the top needs to help the sector.
| Product | Max LTV | Up to 50% LTV | 50.01 – 65.00% LTV | 65.01 – 75.00% LTV | Term & Repayment | Arrangement Fee |
|---|---|---|---|---|---|---|
| Residential
Including Light Refurbishment
|
Up to 75%
Lower of PP or MV |
0.43% pm | 0.53% pm | 0.60% pm | Maximum term 24 months No minimum interest or ERCs Interest Fully Rolled Up, Part-Rolled Up or Serviced (subject to affordability) The net advance will be less total potential interest over the term with the gross loan calculated as interest for the entire term and the arrangement fee added. |
1% -1.5%
Full fee added to
the loan. |
| Semi Commercial
Including Light Refurbishment
|
Up to 75%
Lower of PP or MV |
0.6% pm | 0.6% pm | 0.6% pm | ||
| Commercial
Including Light Refurbishment
|
Up to 70%
Lower of PP or MV |
0.75% pm | ||||
| Residential
Heavy Refurbishment
|
Up to 75%
Lower of PP or MV |
0.60% pm | 0.65% pm | 0.7% pm | ||
| Commercial and Semi Commercial
Heavy Refurbishment
|
Up to 70%
Lower of PP or MV |
0.83% pm | 0.83% pm | 0.7% pm | ||
“During this crisis, the government has already proved it’s willing to listen to industry and it must continue to do so if we stand any hope of protecting those who will drive our economic recovery.”
The trade body is also calling for written guidance for the construction industry to ensure the sector continues operating. They would like this to cover builders’ merchants and other service providers many of whom have shut down during the pandemic.
Speed up the scheme to keep people in jobs
They also want the coronavirus job retention scheme to go live as soon as possible so that companies can manage their cash flow and keep employing their workforce. The government has said it will activate the scheme at the end of April but NFB said this was too long to wait.
NFB head of housing and planning policy Rico Wojtulewicz added: “These measures will help to save thousands of small and medium-sized housebuilders. Without them, we haven’t got a hope of solving our housing and skills crisis, or levelling up our nation.”
The organisation has warned the industry needs to avoid a repeat of the 2008 financial crisis where a third of housebuilders went out of business and 100,000 construction jobs were lost.
Mr Wojtulewicz said the industry has still not fully bounced back and that SME housebuilders were key to helping local rural economies.
Bridging Loans by Hank Zarihs Associates
Brokers Hank Zarihs Associates said development finance lenders supported the NFB’s proposals and that it was essential that the industry was in good shape once the worst of the pandemic is over.
March data pointed to the fastest downturn in UK construction output for almost 11 years according to the construction purchasing managers’ index. The total activity index dropped to 39.3 in March compared with 52.6 in February; a reading below 50 means a contraction. Survey respondents attributed the reduced activity to the impact of the Covid-19 pandemic. Residential activity dropped to 46.6 compared with civil engineering at 34.4 and commercial building at 35.7.