BANKING
Outlook – GB Bank ’ s chief commercial officer Rob Lankey .
RISING TO THE CHALLENGE
Rob Lankey , chief commercial officer at Middlesbrough-based GB Bank , on how the property development sector is showing its resilience in the face of difficult conditions
Interest rates up , house price growth stalling and the cost-of-living soaring – it ’ s fair to say that recent economic headlines haven ’ t been exactly encouraging .
The construction industry is also going through some challenging times , both in the North-East and across the country .
Such a situation following so closely on the heels of the pandemic is a real test of the property development sector ’ s resilience .
However , despite these considerable challenges , there are reasons to be more optimistic about the outlook .
There is no doubt recent Bank of England base rate rises pose problems , with so many loans and other financial products tied to that rate .
However , it is by no means the be-all and end-all that dictates activity in the property development sector – as our recent experience at GB Bank shows .
Enquiries incoming – especially from this region January and February were incredibly busy months for us – we are well ahead of our expected level of enquiries for property lending in what are typically quiet months for the industry , demonstrating strong appetite among property developers and investors .
While we had enquiries from locations across the country , it was noticeable how many of those originated from the North-East , backing up the confidence we have in the property development sector in our heartland .
It has always been our belief that this region has the skills , the savvy and the drive to get property projects done , but it hasn ’ t always had enough specialist support on the finance side .
For example , recent statistics from the National Association of Commercial Finance Brokers ( NACFB ) show that only two per cent of primary property funding from NAFCB lenders was spent in the North-East .
Contrast this with our figures , which show 36 per cent of our recent lending enquiries were from this region , and I think you ’ ll understand why GB Bank exists !
We are here to address a significant gap in the market by supporting SME property developers and investors with much-needed funding solutions .
Big demand , small supply It remains the case that there are currently not enough houses for the people who want to live in them . This mismatch in demand and supply is one of the factors in a near four per cent annual rise in rents , according to the Office for National Statistics .
Rising rents spell potentially larger returns for landlords and rent rises are even larger when it comes to new builds . A recent report by Jones Lang LaSalle says average rents in the build-to-rent ( BTR ) sector rose by eight per cent in the UK and 16 per cent in London , something which is doubtless a factor in the record £ 6.4bn invested in BTR schemes in 2022 .
The North-East build-to-rent boom While London grabs the headlines for rent rises , the effect is not confined to the capital . The North-East was the build-to-rent champion in 2022 , with the
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