How can I fund this property project?
The question posed to me and indeed many of my agency colleagues over the last few years has been from potential property ‘movers’ asking “who will lend me the money to complete this property acquisition/move/upgrade/project”?
News that Bank net lending fell in 2011 should come as little surprise to anyone at the ‘sharp end’ of doing deals in the commercial or indeed residential property markets.
Figures from the Bank of England under the Project Merlin deal showed that total net lending from the five main UK banks’ fell in every quarter of 2011.
The figures also confirmed that the five banks had missed their lending target to small businesses.
“The Merlin targets have failed,” said Andrew Cave from the Federation of Small Businesses. Referring to the commitments made by the UK’s five biggest banks to lend more money to businesses in 2011. The Federation of Small Businesses say 30% of members missed a growth opportunity because of an inability to access finance at the right times. “There is still a problem” said Mr Cave.
Under Project Merlin, Barclays, HSBC, Lloyds Banking Group, RBS and Santander UK, were to make it easier for smaller firms in particular to access credit.
On Friday 10th February, the banks said they had met their overall government-agreed commitments last year, with gross new loans of £214.9bn against a target of £190bn. But significantly £74.9bn was lent to smaller firms, less than the £76bn target.
The banks blamed the poor economic backdrop and a shortfall on fewer firms coming forward for credit.
It is clearly not a problem of the Banks but of UK Plc to improve the business environment and prove the case for confidence and investment in the economy.
Whilst property is a sector that has seen a lot of scrutiny over the last four years and rightfully so there needs to be a look from property professionals to help funding lines in this market.
Tapping into the huge funds available in Pension Schemes and successful property companies will be vital to see the growth and investment in property, alone, which is just one part of the economy where investment is now needed.
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