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Ask the Expert: Smarter fi nance for developers
Following a recent Building Insights podcast with Housebuilder & Developer editor James Parker, BuildStore Mortgage Services’ Tom McSherry explains the importance of transparency, tailored solutions, and early fi nancial planning for bridging development fi nance.
COULD YOU EXPLAIN THE DIFFERENCE BETWEEN REGULATED AND NON-REGULATED FINANCE FOR RESIDENTIAL DEVELOPMENTS? Regulated fi nance falls under the oversight of the Financial Conduct Authority (FCA) and typically applies where the loan is secured against a borrower’s home, or where they or their family will live in the property. The regulation is designed to protect consumers, with strict requirements around affordability checks, advice, and transparency. Non-regulated fi nance, on the other hand, is generally used for commercial or investment purposes; for example, short-term bridging or development loans for projects which will be sold or rented out by a developer. These products are tailored to each project, but they don’t carry the same FCA protections.
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WHAT ARE DEVELOPERS’ KEY ISSUES AND QUESTIONS THEY ARE ASKING YOU CURRENTLY IN TERMS OF SHORT-TERM BRIDGING LOANS (FOR EXAMPLE, AFFORDABILITY AND INFLATION)? One of the biggest is cost. Short-term borrowing does come with higher interest rates compared to traditional loans. Developers also worry about tight timescales, since bridging loans are usually arranged quickly and need to be repaid within a short window, often linked to the sale or refi nance of the property. In today’s market, there are added pressures around infl ation and build cost overruns, which can make exit strategies feel less certain.
That said, bridging fi nance is designed to be a fl exible problem-solver rather than a long-term burden. At BuildStore, we work with specialist lenders who understand the development market and
can tailor terms to the project’s needs. For example: • Speed: Funds can often be released within weeks, helping developers secure opportunities that would otherwise be lost.
• Flexibility: Bridging can cover land acquisition, site costs, or even help refi nance partway through a project if circumstances change.
• Exit planning: As an Independent Mortgage Specialist, we focus on aligning the bridging facility with a clear repayment route, whether that’s development fi nance, a stage-payment mortgage, buy to let or the eventual sale of the property.
By setting realistic budgets, preparing for contingencies, and ensuring that lenders are clear about the developer’s goals, bridging fi nance becomes a strategic tool
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