BIG Modular Housing Finance News
Anyone who works in modular housing, or has considered developing modular housing, is excited by the concept.
The huge reduction in time and costs offer much better efficiencies and profits, as well as wide ranging benefits for the whole industry.
But there’s always been one big problem….financing the build offsite.
But why though? The issue has been when lenders can make payments to suppliers.
Development finance lenders hand over capital ‘in arrears’ to developers, and the problem with modular, and offsite construction in particular, is the supplier terms. That is to say the payments need to be made ‘in advance’, not arrears.
For developers this is a major problem, and takes funding from a fairly cheap development finance cost into a much more expensive trade finance or supplier finance cost. There are also significant issues with getting trade or supplier finance too, so you may need to cashflow entirely yourself!
So what’s changed?
We speak to over 50 lenders on a regular basis about all manner of funding issues, and one hot topic in recent times has been modular. When are you going to come up with a solution we ask?
Well 1 or 2 lenders now have a solution..
There are cases going through now where lenders are funding against supplier contracts on an LTV basis, usually up to 50% or even 60% of the contract on a cash in, cash out basis, provided the terms are not too horrendous.
At the moment minimum total lending starts from £5m, but with more lenders likely to follow suit this should come down somewhat.
What to do next..
If you’re in modular and have been frustrated by funding, or want to get into modular and know more, call us on 0203 651 9595 or email firstname.lastname@example.org.
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