Our January view towards 2020 was entitled ‘An Exciting Year Ahead’ and who could have predicted what a very exceptional year it would be!
At the beginning of the year, everyone’s focus was on Brexit and what changes that would bring. Well, we still do not have the answers for this, but the B-word was very much been placed to the back of our minds and replaced with the C-word (COVID-19).
In January we noted the flurry of properties being brought to the market, with average house prices surging 2.3% since the general election, and the prediction of a ‘well-timed recovery heading into the traditionally busy Spring period’. Then it hit us. Covid-19, a deadly virus that started in far off China that quickly moved across the globe spreading extremely quickly into the UK in March this year, resulting in the complete lockdown of the UK and much of the rest of the world.
While businesses and families were fighting for their financial lives, everyone, including our team at Pluto Finance stopped for a moment and took stock with a feeling of impending doom and definite uncertainty, this time not related to Brexit. However, while banks’ appetite for lending diminished and some lenders stopped altogether, we remained very much open for business, albeit more increasingly from the comforts of our own homes.
We completed a number of transactions earlier in the year, post-lockdown, including: a £13m Wembley development exit facility; a £3.4 million exit loan in Hertfordshire, and; a £9.7 million acquisition funding in Milton Keynes.
Halfway through the year we posted an update of strong levels of new enquiries throughout, which we were eager to support. And in September and October we closed a total of £97 million of new loans including our largest loan this year of £35 million to fund the acquisition and development of a residential-led mixed-use scheme in Chiswick, West London, two site acquisition loans, totalling £16 million in Ashford, Kent and Cockfosters, North London, and the £34 million funding of 700 purpose-built student accommodation units in Swansea for Bricks Group’s ‘true’ brand.
So, despite the massive changes to our daily lives and the short-term disruption in construction site activity earlier in the year, it has not all been doom and gloom. The introduction of the raising of the stamp duty threshold in July has certainly been a boost for the housing market, increasing sales across the UK, but particularly in the South East. This has enabled some of our developer clients to exit schemes with our support and move onto to new projects to continue the pipeline of development for much needed housing and mixed-use stock.
In addition to the development exit loans, completed earlier this year and mentioned above, in Essex we provided the borrower with a £10 million development exit bridge and equity release. Towards the end of 2020 we have seen an increase in these types of queries from developers looking at gearing up completed schemes through development exit bridge loans to release equity to acquire new sites.
We are continuing to focus on lending sensibly within our core appetite. Our core appetite has traditionally been to lend in London and the South East, to capable and experienced borrowers, on well-priced units in areas of high demand. However, we will go further afield for the right project and sponsor. On the bridging front, we are currently placing an emphasis on income producing commercial assets with strong covenants, and residential units with strong pre-Covid comparable sales evidence. For development, we are looking to support seasoned developers building mid-market stock within London and the South east. We will also consider further Student Development opportunities for experienced operators.
As ever, we are able to offer flexible and market leading facilities to support our borrowers and we encourage borrowers to keep their spirits up and keep talking to us to keep the market moving.
