Commercial Property Developments Planning Permissions Stall in 2016 Due to Lack of Finance for Smaller Developers

Planning authorisations for commercial property growth across the United Kingdom reach their lowest levels since 2009.

Reportedly, the drop has been blamed on the lack of money for financing smaller developers with their proposals.

Since 2010, large advances have held steady at 2,000 each year, although the number of smaller advances has declined from 11,300 in 2010 to 9,300 in 2015.

On the other hand, there have also been cautions that the EU referendum is a damaging call for real estate and property market.

According to a commercial estate agency, Lambert Smith Hampton, Central London headquarters have been seriously hit by Brexit fears, with investment dropping to £2.2bn in the initial quarter of this year, down 52% from £4.6bn in the last quarter of the previous year.

Saving Stream, a peer-to-peer lending property funding platform, found that smaller developers are having issues with the banks’ limited ability to offer development backing for the marketable property, with larger establishments obliged to hold more regulatory capital against lending for new developments than for pre-let and pre-sold developments.

Saving Stream’s director and co-founder, Liam Brooke stated: “The banks just aren’t able to lend to commercial development on anything like the scale that they once did, and smaller commercial developments are struggling to get off the drawing board as a result. The big listed developers still have plenty of access to finance for large office, retail or industrial developments, but it’s a different story for smaller developers looking to get spades in the ground on more modest plans.”

Post Brexit, we now have the uncertainty of who the next prime minister will be (David Cameron resigned after the Brexit result), a new cabinet will need to formed and experts predicting what now is a volatile economy in the absence of invoking  Article 50. Hopefully, September 9th may start to put a clear plan and strategy in place as we will know who our next PM will be.