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Property Developers Are Scr*wed

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http://www.ft.com/cms/s/0/87601c60-f518-11...?nclick_check=1

Speculative property development in the UK has seized up amid rapidly worsening credit conditions, according to industry insiders.

The launch next week by Assetz, the property investment group, of a fund to bail out builders struggling to raise debt finance is being seen as the latest sign of deteriorating conditions, which have worsened even in the past fortnight.

...

The appetite for cash even at this level of premium underlines just how desperate the situation has become for many developers. The health of the debt markets is key to the property sector, both commercial and residential, since developers and investors both rely on high levels of borrowing.

Certain companies are halting speculative development in the commercial sector, while the residential market is also being affected, particularly in the unlisted sector.

What do they mean by "unlisted sector" of the residential property market?

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Excellent I know an uppity property developer bankrupted 5 years ago running about in a Range Rover Sport I expect the big burly chaps will be calling soon :lol::lol::lol:

I normally say good luck to someone doing well for themselves but this guy and his business partner are a pair of twats.

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Small Developers that are not listed are wholly dependent on the will of banks to lend and the use of their own personal capital resources.

The greatest problem for the business is that although the gains can be high, the capital outlay and return of captial is punative and protracted.

The competition for small plots of less than 40 units is extremely high, and over the market prices have been paid for development land. Fine in an ever increasing HPI marketplace whereby you can pay a 10% premium on land purchases safe in the knowledge that by the time to build out to sale the prices have increased by 20% making you an immediate profit.

However owning a 40 unit multimillion pound land purchase, and finding that nobody will lend the money to build it out, coupled with high interest rates to service in the interim, you are looking at nothing more than a slow and painfull road to financial ruin.

The book on development loans to finance land purchase, and build costs is all but closed. The banks have been very quick to shut this particular door of subprime borrowing, and the lessons learnt in the past recession have not been repeated en mass.

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Agreed

Very true.

And if they put Kevin McCloud in charge of planning policy in this country, then the UK would be a more beautiful and I think fairer country in which to live.

Most of us love old fashioned architecture (modernism is 100 years old)... but we aren't allowed to build it because of the people who prefer ancient architecture where people live in basically wood framed buildings caulked with cowpoo and roofed with marine vegetation.

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The Site where I work is 250 acres and has a Barratts/Bovis/Persimmon consortium building and

selling off new-builds at one end of it.

They have built, maybe 80 houses/flats.

They were projecting 2,000 houses to be built in total.

However, activity on the site has well nigh halted, as far as I can see.

Very few of the finished properties are occupied.

Bovis are offering "Occupy for £99 down"

Barratts are offering a "75% purchase and ten years to pay off the other 25%" for

two bed flats.

This is in Gloucester.

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[deleted]

The competition for small plots of less than 40 units is extremely high, and over the market prices have been paid for development land. Fine in an ever increasing HPI marketplace whereby you can pay a 10% premium on land purchases safe in the knowledge that by the time to build out to sale the prices have increased by 20% making you an immediate profit.

However owning a 40 unit multimillion pound land purchase, and finding that nobody will lend the money to build it out, coupled with high interest rates to service in the interim, you are looking at nothing more than a slow and painfull road to financial ruin.

Unless you can sell the unbuilt flats in advance, to idiot would-be flippers, using an "instant equity" scam.

(Assetz are behind this new fund, no?)

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Very true.

And if they put Kevin McCloud in charge of planning policy in this country, then the UK would be a more beautiful and I think fairer country in which to live.

Most of us love old fashioned architecture (modernism is 100 years old)... but we aren't allowed to build it because of the people who prefer ancient architecture where people live in basically wood framed buildings caulked with cowpoo and roofed with marine vegetation.

To be honest, pretty much anything that is designed with care is going to be an improvement on the standard box..

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Unless you can sell the unbuilt flats in advance, to idiot would-be flippers, using an "instant equity" scam.

(Assetz are behind this new fund, no?)

Well, well....... Just take out a LIAR LOAN!!

All the world's problems of the world VANISH if you take out a

LIAR LOAN!!!

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A friend of ours signed up with a property developer back in '05 and completed late last year. The developer was a week late getting the money because apparently the bank suddenly planted a load of extra conditions on the loan, even though quite a lot of it was self funded.

Apparently he has been hoarding the sites he got planning permission on rather than building out and making the money (the opposite of STRing too early, which one is the most dangerous I wonder - sorry wrong thread) and so I reckon he is really in trouble.

I heard yesterday that our friend's neighbours, who had signed up with the developer in the Autumn after 2 years of not being very nice to our friends have now been told that he is pulling out of buying their house, so they are fooked.

I don't think that he will last much longer. Our friends might be able to buy their old house back for a song, had they already not found somewhere much nicer - and with better neighbours. :)

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  • 294 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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