Blackfinch brings back pre-pandemic criteria

Blackfinch Property has restored its maximum LTV for residential development loans to its pre-pandemic level of 70%.


John Hartigan, senior investment manager at Blackfinch Property (pictured above), said that the decision was made following the success of its portfolio’s residential schemes and the general robustness of the housing market.

In addition, Blackfinch will no longer apply stress tests to residential development projects.

The tests will, however, still apply to commercial lending propositions for the foreseeable future due to market ambiguity in some areas, such as the office, retail, hospitality and leisure sectors.

“When the effects of the coronavirus pandemic were evident in February and March of 2020, there was significant uncertainty as to the potential impact on property values — however, it soon became clear that new UK government guidelines would restrict the pace of ongoing developments, or temporarily close them,” said John.

“At the same time, it was also evident that buyers would struggle to visit sites and complete purchases.

“Therefore, rather than assume changes to GDV, we applied new ‘stress tests’ that catered for delays to the build and sales phases of new development projects, [and] loans continued to be provided on new projects — albeit at a reduced LTV. 

“If the project had a fixed-price JCT contract, and the borrower had healthy net assets for a strong personal guarantee, then the LTV could be increased.

“We have been paring back the stress tests gradually during the pandemic and we’re pleased to confirm that Blackfinch Property will now consider UK residential development schemes without any stress test being applied.”

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