Transition Finance for Property Developers in Ireland
Bridging the period between development finance and sale, using a bridging loan in Ireland
There is rarely a day that goes by where we don’t read about the lack of stock in the housing market, delays in housing projects, issues with planning processes or about growing social housing waiting lists. In addition, there are vacant or derelict properties in every city, town and village in Ireland. These are properties that – with a little vision and some financial backing - could be brought back into the housing stock.
The housing market needs increased stock, and home builders and developers need financial support in order to meet this demand. New opportunities are missed, and future projects postponed, due to delays in completing current developments. These missed opportunities lead to higher costs down the line as land prices rise and the costs of materials and labour increase. What might have been a lucrative opportunity at one point may not even be profitable 12 or 18 months later.
It’s also becoming increasingly difficult for developers to access finance when it comes to smaller schemes or one-off house-builds. The pillar banks don’t seem to want to support home builders or provide finance for anything but the largest projects. The alternative lenders have multi-million Euro minimum loan sizes which excludes a large proportion of the home building market. At Onate, our minimum loan size is €150,000 so we can support the home builders and developers that the other institutions won’t.
We are also seeing a trend of sales taking longer to close. This obviously has a knock-on effect on cash flow. As initial sales are often used to fund the completion of the next phase of a development, this delay directly impacts project profitability. As it stands, sales can take 12 to 16 weeks to close. One of the main drivers seems to be a lack of focus on speed of execution by some financial institutions, which can take the form of a delay in issuing formal approval or a delay in requesting or providing the title deeds to relevant solicitors. At Onate we place an emphasis on execution, and speed is one of our key selling points. We take a holistic approach to each closing and ensure that all parties know what they need to deliver to meet the expectations of our clients.
We have recently been speaking to a number of investors and developers who cannot sell completed houses as they are awaiting Irish Water and ESB connections. In one case, the developer had been waiting over three months for these utilities to be linked up. This developer was stuck in limbo as they couldn’t sell without utilities being connected. At Onate we can take a more commercial and pragmatic approach than the pillar banks, and are more than happy to provide finance on houses that are awaiting utilities connection.
All these issues - whether its lack of support from banks, problems with existing development finance providers, or delays with connecting utilities and in closing sales - all come down to one thing – cash flow. This is where Onate can help.
At Onate, our product can help bridge the completion and subsequent sale of residential units and get much needed stock on to the housing market. Our team of experienced, specialist property lenders offer bespoke residential investment bridging loans to home builders, developers, property investors and entrepreneurs. We are fast and flexible, and we assess each case on its merits. All our decisions are taken in-house which means we can move quickly and with certainty. We have an appetite to lend in all locations nationally – from cities and large towns to small villages and rural locations.
When opportunity knocks, we answer fast!
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