Invest & Fund: P2P will play “significant role” in regional housebuilding
Invest & Fund said that peer-to-peer lending will play “a significant role” in regional development and argued that the housing crisis is a more pressing issue than the government’s Levelling Up initiative.
The P2P property development lender said that a shortage of housing in the regions is an “immediate problem” that private funders need to help address.
Invest & Fund noted the recent distribution of the government’s Levelling Up fund across the country and the idea that funding specific projects, such as The Eden Project in Morecambe, will bring in jobs, tourists and people with higher incomes to the area.
Read more: Invest and Fund predicts P2P will outperform REITs in 2023
“Unfortunately, however, Morecambe is an area with acute issues requiring funding, including housing; an original plan to build 9000 new homes in the area was delayed in December 2022 due to significant funding gaps and spiralling costs relating to the deployment of the Housing Infrastructure Fund,” the firm said.
Invest & Fund argued that there is “a specific need for private funders and funders benefiting from the Futures Fund” to have a more specific presence in regional development, given the requirements for housing in the North West and all regions.
“It’s solution-based lending at a time of substantial problems, and with regulatory hesitancy overcome, it would be foolish to believe P2P won’t play a significant role,” the lender said. “The point here is that levelling up funding for the North West is fantastic; it’s benefited the most in both rounds, but it can’t be at the expense of more targeted financial assistance to some sectors, including housing. Trickle-down economics can take a generation to see results; housing is an immediate problem.”
In September 2020, Invest & Fund announced a seven-year partnership with Homes England to increase the amount of finance available to smaller developers.
The partnership initially created a £25m revolving fund which would fund construction loans of between £400,000 and £2.5m, at up to 80 per cent loan-to-cost.
The partnership was extended with the launch of a new development finance capped rate facility in September 2022, which was rolled out earlier this month.