£100 million in loan facilities in a record-breaking month

June has been a record-breaking month for Maslow Capital; completing £100 million of new facilities across four deals. The transactions will see the delivery of 1,100 new residential and student accommodation units in Manchester and Glasgow.

In total, these developments will deliver in excess of 847,000 sq. ft. of new residential and student accommodation. Three of the deals, totalling over 736,000 sq. ft. are located in Manchester, with the remaining deal providing 111,000 sq. ft. of purpose-built student accommodation in Glasgow.

Maslow’s record month follows more than £200 million of new development loans so far in 2018; a 20% increase compared with the same period last year. The addition of these four deals takes the total to over £300 million for the six-month period ended June 2018.

These recent closings highlight the strong demand for alternative sources of finance from UK developers. It also reinforces Maslow’s view that there is a broadening appetite for specialist lending.

Sky Mapson, Lead PBSA and Residential Originator at Maslow Capital, who is responsible for the four deals, said:

“The closing of these deals is further proof that not only is the demand out there for specialist funding but that developers are connecting in a big way with providers who combine a flexible approach with real expertise. That we can close £100m in facilities in just one month is a testament to the confidence that we and our clients have in certain parts of the UK and the chronic need for new housing in these cities. These deals demonstrate that we have a strong appetite to support regional developments across the country, providing loan facilities with an average size of £25m to experienced sponsors.”

June has been a tremendous month for Maslow following a strong start to 2018. Maslow Capital is delighted to meet the growing demand for alternative financing from developers throughout the country. In particular, continuing to see more and more opportunities across cities in the north and in Scotland – with Manchester and Glasgow two prime examples. Maslow expects this trend to continue throughout the year, as well as the broader trend of demand from clients for the unique combination of specialist knowledge, balance sheet strength, and structured credit facilities.

An exclusive feature was showcased by Real Estate Capital, read more here.

Has Help-to-Buy caused house prices to skyrocket?

It has been viewed as one of the most significant interventions in the UK housing market by a government in over 30 years, but since its inception in 2013 there has been continued controversy surrounding the Help-to-Buy scheme (HTB) which aims to help buyers onto the property ladder.

Whilst hundreds of thousands of household’s acquisitions have been supported by HTB equity loan scheme, it has been widely reported that the scheme has also resulted in a disproportionate increase in house prices which has in turn, further exacerbated the affordability factor. However, a closer look at regional statistics shows that the relationship between house prices and HTB is not so obvious. For example, London has evidenced a significant house price increase of 51% since April 2013 however only 13.4% of new build sales were supported by HTB equity loans. Conversely, Newcastle upon Tyne has recorded a price increase of 20.6% with a significant 50.6% new build sales supported by the HTB Scheme. This is similarly evidenced in Liverpool and Sheffield with 37.9% and 32.2% of purchases being supported by HTB respectively, but house price growth in these locations has been below the national average over the same period.

House price growth since HTB inception and % of new build sales purchased using HTB equity loan

help to buy

Source: HM Land Registry, Ministry of Housing, Communities and Local Government.

In addition, affordability remains an issue in many locations even with the support of the scheme. HTB equity loan purchasers require a 5% deposit which, in London, equates to £27,000 £12,000 in Birmingham, £11,700 in Leeds, and £9,400 in Liverpool, based on average new build house prices recorded by HM Land Registry. With the Office for National Statistics reporting that UK median disposable household income is c.£27,300, it can still take residents many years to save up enough to qualify for the scheme.

Whilst it’s easy for critics to blame HTB for price rises, the last 5 years have a been an unprecedented political and economic roller coaster and there have been many other factors at play, including interest rates at historically low levels and a weakened currency, which has made UK real estate, including regional property, more attractive to overseas investors. Moreover, it is a well-known fact that the housing market remains inherently under-supplied in many parts of the country. Whilst it cannot be argued that house prices across the England haven’t increased significantly since 2013, it is difficult to assess the true impact of HTB where markets are so under-supplied.

Whilst HTB continues to cause controversy, it is my view that affordability measures such as HTB are required to ensure home ownership can be achieved by a greater proportion of the population. These measures however are not the only solution and the continued supply of accommodation in all regions is essential. New supply will not only deliver affordable accommodation but also assist in moderating the high rate of price growth that has been evidenced. Maslow Capital is focused on supporting house builders in affordable locations and recognises the HTB scheme as one part of a portfolio of measures to assist purchasers with owning their own home.

Sources: HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0. Ministry of Housing, Communities and Local Government.

Also featured in the April 2018 edition of the NACFB magazine.

Maslow Capital buys £100m loan portfolio

Maslow Capital has completed the acquisition of a loan portfolio secured against a blend of land with planning, residential, purpose-built student accommodation (PBSA) and mixed-use development schemes. This represents Maslow’s first participation in the secondary market with a further transaction currently under consideration.

In aggregate, the portfolio will see more than 438,000 sq. ft. of new residential, mixed-used and PBSA units delivered. Assets are well located across regional markets in the UK and are in line with Maslow’s strategy of targeting key regional cities.

Demand for Maslow’s senior debt and stretch senior debt products have been growing and we have, to date, provided debt facilities with a collective GDV in excess of £1.6 billion, covering 4,900 new properties enabling the delivery of more than 3.2 million sq. ft. of new accommodation throughout England and Wales. Maslow’s ability to acquire this portfolio was made possible by the depth and flexibility of its balance sheet together with a team that possesses the necessary skills to assess a complex loan portfolio secured on part-built assets.

This acquisition represents an exciting opportunity for Maslow, enabling us to gain further exposure in target markets across the UK, reinforcing our capability across residential, mixed-use and the PBSA market, in which we see particular growth potential going forward. The purchase of an existing loan portfolio is a first for us and we hope to make further acquisitions of this nature in the future as we further scale our lending.

NEWS: 2018 kicking off with 4 deals, £74 million

Maslow is delighted to announce the completion of four exciting deals with a total of £74 million lent.

The four deals provide funding for new residential developments in London and Manchester, delivering more than 80 new apartments and new commercial space along with 211 student beds in Coventry, and 246 in Sheffield. In aggregate, the developments will deliver more than 195,000 sq. ft. of new accommodation in sought after locations.

Specifically, these loans will assist with the delivery of 18 new apartments and a new commercial unit at Halt Parade, London, NW9 arranged over six floors and the construction of 66 new flats which will be delivered in the Ancoats district of central Manchester, addressing continuing need in the city for well-located apartments.

In Coventry and Sheffield, the funding packages will see more than 450 new student beds brought to market in cities where university accommodation continues to be in high demand. Both cities are growing as centres for education, and these new facilities, which will be located near main university campuses, will be completed in time for the 2018/19 academic year.

The deals represent a continuation of Maslow’s diversification of its exposure into different real estate market segments covering residential, mixed-use and purpose-built student accommodation across the UK.

A look into our crystal ball, 2018, key trends to look out for

As the unpredictable, uncertain 2017 draws to a close, we have reflected on the year behind us and have taken a brief look at the key trends to look out for in 2018.

Without doubt the housing sector will remain top of the government’s agenda in 2018, ahead of Brexit. With many considering supply shortages as the biggest threat to the UK economy, in our recent article entitled “Without the right foundations, 300,000 new homes will simply not get built” we consider the true changes needed to boost housing supply in 2018, including proper collaboration between the public and private sector and proper reform of the planning system. Could 2018 be the year that the government introduces significant changes to truly drive the housebuilding sector forward?
Should economic growth exceed expectations in 2018, it is likely the Monetary Policy Committee will raise interest rates, with some predicting a double rate rise over the course of the year. Whilst the Royal Wedding in May is predicted to boost the UK economy, a rate rise will also greatly depend on whether inflation has now reached a peak. However, a 25 – 50 bps rate rise to historically low rates, is unlikely to have any significant consequences to the housing market in the short term. In the third quarter of the year, the Building Societies Association reported that 90% of new mortgages taken out with Building Societies were on a fixed rate. The real impact of rate rises and the time to truly be concerned is yet to come, when, in 2/3/5 years’ time these fixed rates expire, and homeowners find themselves on much higher variable rates or having to choose between other higher rate products.
A year ago, we predicted a continued rise in the Build-to-Rent sector as stretched affordability in certain parts of the country would leave the desire for home-ownership as a distant dream for many, increasing demand for quality rented accommodation. Affordability issues have not disappeared and therefore this sector continues to grow, and we anticipate this to remain the case in 2018.
The main tranche of the market where we expect further strong activity is that of the first-time buyers (FTBs). In 2017 FTB activity was significant; according to UK Finance, there was a 10.5% increase in the number of loans for house purchase to FTBs in October 2017 when compared to a year earlier. We expect this trend to continue boosted by the extension in Help-to-Buy and importantly, the scrapping of stamp duty for FTBs up to £300k on properties valued less than £500k. This should also encourage developers to build units below this threshold as this, in the right location, is where they should find a steady stream of demand.
And lastly, whilst market growth will be muted in 2018, we do anticipate above-average growth in the North West, North East and Yorkshire and Humberside. Regions where affordability is most stretched, including London and the South East, are likely to underperform the rest of the country. However, even within this part of the country, there will continue to be some growth in some locations, such as in the up and coming London boroughs, those benefiting from the Elizabeth Line, and along the commuter belt where prices will remain under upward pressure because of supply shortages.