He explained how SME developers are adapting, why leverage has crept upward, and how UTB is broadening its offering to support projects ranging from ground up housing to emerging sectors such as build to rent and co living.

How would you describe the current climate and its impact upon lending? Who is your main client base?

Our core client base is SME developers. That includes regional housebuilders delivering ground-up residential schemes, as well as entrepreneurial developers working on opportunity-led projects such as repurposing brownfield sites or converting existing buildings into residential or mixed-use schemes.

The biggest challenge in the current market is viability. Developers have been dealing with several pressures simultaneously — planning delays, higher interest rates, build cost inflation and ongoing labour shortages. When those pressures combine with increased regulatory requirements, it becomes harder to make schemes stack up. That is particularly visible in London.

The sales market for flats has also been challenging, which has slowed development activity further. However, that doesn’t mean demand has disappeared — far from it. What we are seeing is a market that is recalibrating, where projects need more careful structuring to go ahead.

What has happened to average LTC levels in the last 18/24 months?

The development finance market has become increasingly competitive over the last couple of years. While housing delivery has slowed, the availability of development finance has actually expanded as both banks and non-bank lenders continue to deploy capital into the sector.

That competition has had an impact not only on pricing but also on leverage. We’ve seen lenders gradually pushing loan-to-cost and loan-to-GDV ratios higher in order to secure good quality transactions.

At United Trust Bank we remain disciplined in our underwriting, but we are prepared to be competitive for the right deal. For strong developers with a proven track record and a robust scheme, we can support gearing of up to 90% loan to cost and 70% loan to GDV.

Are you seeing more refinance requests due to slower sales?

Yes, in some cases developers are seeking more time to execute their exit strategy, particularly where sales have taken longer than originally expected.

In those situations, we can consider supporting developers through extension or development exits — providing additional time for sales to complete or refinancing finished units to release equity to unlock further projects.

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What mistakes are developers currently making when approaching lenders?

I wouldn’t necessarily say developers are making mistakes and the majority understand the funding process well, especially where they have established relationships with lenders.

As has always been the case, developers who can demonstrate track record and a well-considered, properly capitalised scheme will fare well.

Are you seeing more JVs rather than straight debt?

Yes, joint ventures and other forms of structured capital are very common among SME developers today.

Many developers are working with landowners, contractors or capital partners through joint venture arrangements, option agreements or overage arrangements.

These approaches allow developers to manage capital efficiently and unlock opportunities that might otherwise be out of reach if they were relying purely on traditional debt funding.

Is there increased demand for bridging due to slower bank credit?

We’re not necessarily seeing slower bank credit — development finance remains widely available in the market.

Where bridging demand has increased is around transitional stages in the development lifecycle. For example, regulatory requirements such as the gateway process can create situations where developers need short-term funding before moving into a full development facility.

Are you stepping into deals that clearing banks may be declining? How has your risk appetite evolved over the last 18 months?

Our approach has been less about pivoting and more about broadening our offering.

Over the past 18 months we’ve expanded into areas such as build-to-rent, co-living and student accommodation, and we’ve also completed acquisition finance transactions where planning or development proposals were still evolving.

We’ve also introduced greater flexibility in our structuring and gearing, which differentiates us from the clearing banks, and allows us to remain competitive while still maintaining a disciplined credit approach.

What does a smaller housebuilder need to demonstrate to secure funding? Is it harder for apartment schemes?

For smaller housebuilders the principles remain unchanged. Track record remains a consideration, although for newer borrowers — that may come from the individuals, rather than the company itself.

Apartment schemes can be more challenging in the current environment, particularly in some city markets where the slowdown in sales and rising costs have made larger schemes unviable.