The Intermediary – March 2025 - Flipbook - Page 12
SPECIALIST FINANCE
In focus
Sometimes work doesn’t go as intended, and
properties aren’t fully completed.
“It’s an area that needs manual underwriting
and understanding, as the individual builds,
renovations, and conversions are all so different.
It needs experienced, skilled underwriters,
product and policy teams, and expert valuers.”
Embracing modernity
While self-builds are carving out a space in
the housing market, Modern Methods of
Construction (MMCs) are redefining how homes
are built altogether. Faster, greener, and less
reliant on traditional labour, MMCs have the
potential to supercharge the UK’s housing
delivery – but only if the finance industry is
willing to evolve alongside it.
Traditional lenders, ever the cautious
gatekeepers, remain wary of MMC’s long-term
durability and resale potential, leaving a critical
funding gap. Fortunately, specialist lenders are
proving they have the expertise and flexibility to
finance innovation where others hesitate.
“There has been an increase in demand for
these types of properties,” says Grimshaw. “We’ve
"We used a very small developer"
certainly seen more cases coming to us where the
borrower has such builds in mind.”
However, while borrower appetite is growing,
funding remains a challenge. Grimshaw says:
“The issue for lenders is a lack of evidence of
financing. Charlotte Grimshaw, head of
the longevity of these methods – particularly
intermediaries at Suffolk Building Society,
with our British weather! Valuers will consider
highlights a worrying knowledge gap, noting
the saleability of the self-build property in the
that “our own research found that two-thirds of
future and make their lending recommendations
potential self-builders didn’t know that some
accordingly.”
mortgage lenders will allow them to borrow to
purchase land where planning permission has
been granted.”
Many mistakenly assume they must buy land
David Johnson of The Modern Builder
explains: “MMC has the potential to play a
outright with cash or rely on family-owned plots,
crucial role in meeting the UK Government’s
when in reality, specialist finance offers tailored
target of delivering 1.5 million homes by 2030.”
solutions to make self-build projects viable.
In fact, it is the flexibility and adaptable nature
afforded to borrowers by specialist lenders that
can in turn cater to a variety of self-build projects,
accounting for even the most niche of property
requirements.
“We’ve recently allowed multi-plots,”
The advantages are clear, he adds: “Many
elements are prefabricated offsite, reducing onsite build times by up to 50%.
"This allows homes to be completed faster and
with less disruption.”
MMCs are also more sustainable, with less
material waste and better thermal performance,
Grimshaw notes. “Properties adjacent to a
which translates to lower energy bills and
borrower’s existing home can now be considered,
reduced carbon footprints.
and we’ll also allow applications with outline
planning permission, with full permission
required before completion.”
Due to their complex and often changeable
nature, self-build loans require ongoing and
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Caution from traditional lenders is one of the
key barriers holding the MMC market back.
Johnson says: “With the ongoing shortage
of skilled construction workers, MMC reduces
reliance on traditional trades, as much of the
construction is automated or carried out in
controlled factory environments.”
hands-on lender involvement, ensuring that
Despite the benefits, high street banks are
projects stay on track and reach completion.
still proving slow to adapt in many instances,
Grimshaw says: “No case is ever the same.
favouring traditional brick-and-mortar builds
The Intermediary | March 2025
