Do organisations in our industry have a moral responsibility to try and improve the world?

It’s perhaps not a question which many of us ask as we go about our day-to-day business, but I believe that won’t be the case for too much longer.

The rising importance of ESG (Environment, Social and Governance) issues, particularly for investors, makes it more pressing for people to consider the impact which their actions – or the lack of them – have on the world around them.

While some companies are still taking a ‘tick box’ approach to ESG, many are becoming much more sophisticated and exacting when it comes to investments. As a result, projects and schemes which do not come up to scratch in terms of their positive impacts on society are getting increasingly short shrift.

However, despite these laudable intentions, there is still a danger that even well-meaning projects which are backed with a good level of funding can fall short.

A recent report from an all-party group of MPs found that the Government’s current Levelling Up policies were not making much headway in some of the country’s most “left behind” areas.

Identifying a total of 225 neighbourhoods in England as “left behind”, the report said these places continue to experience high levels of deprivation and community need and low levels of investment and resources.

The MPs said that one of the major problems facing “left behind” areas is that attempts to improve the communities tend to be made on a top-down, national level, which can mean local needs are not properly addressed and local people do not feel like they are in control of how money is spent.

Paul Howell, the Conservative MP for Sedgefield and co-chair of the all-party group, said the correct approach had to be to “give communities the capacity to do things themselves”.

I couldn’t agree more.

This is one of the key reasons and guiding principles which we follow at GB Bank.

We were set up with the express purpose of making a difference in the communities that need it most by investing in the expertise and experience of local SME property developers and investors.

These are the people who understand their communities best, who appreciate local needs and concerns and who know how to turn ideas into reality.

We work with them via our network of local Relationship Managers who are experts not just in finance but also in their local areas, and we take a flexible approach to funding so that the finances fit the project rather than the other way round.

So far we’ve helped on everything from assisted living accommodation for adults with learning difficulties and affordable accommodation to expanding a chain of children’s nurseries and breathing new life into a neglected high street.

While relatively small compared to grand property schemes, these developments are making a real difference in their communities.

They’re also helping to power our own progress as GB Bank. We have ambitious plans to fund many more transformative developments across the country as we look to grow further and continue trying to make the world that little bit better.

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By Rob Lankey

It will not have escaped the notice of any Moneyfacts readers that the UK property market is facing a lot of challenges at the moment.

With the Bank of England keeping rates at a 15-year high and construction material inflation running into double digits, it isn’t an easy time to be a property developer at the moment (if it ever was!)

In a rapidly shifting market, developers are having to think and act fast and be very flexible in their approach and this is one of the factors in the continuing rise in the popularity of bridging finance.

Bridging loans used to be thought of in some circles as the finance of last resort for developers who were stretched for cash and racing against time.

But as the UK property market continues on its unpredictable path, bridging solutions are emerging as one of the best ways to negotiate the minefield of modern development.

What’s more, bridging finance is helping to breathe new life into the market while also providing numerous benefits.

For borrowers, bridging finance offers unparalleled flexibility and speed. Traditional mortgage applications can be cumbersome and time-consuming, often taking months to secure. In contrast, bridging loans can be arranged in a matter of days, allowing borrowers to seize time-sensitive opportunities.

At GB Bank, we’ve combined this flexibility internally with investment in technology and streamlined processes combined with professional services partners to turn around some bridging finance solutions in less than a week.

Such speed can be crucial in situations where time is of the essence, which is often the case with property projects in the current economic climate.

We’ve seen a number of cases where developments have got part way through and then have had to stop due to financial issues or projects where properties have only been partially completed as construction companies have succumbed to cost pressures.

In situations like these, the clock is ticking and certainty is in short supply, so the timely arrival of finance to kickstart development is absolutely crucial.

Another advantage of bridging finance is its versatility. It can be used for various purposes, not just buying properties or development land.

At GB Bank, we’ve developed a whole range of bridging solutions for both residential and commercial properties and we’ve seen our finance used for everything from completing a part-built home to opening up a dormant high street unit.

With these kind of examples, it’s easy to see why bridging finance is having such a moment. It is actively contributing to the overall health of the UK property market in helping to facilitate property transactions that might otherwise have stalled or not occurred at all.

This matters not just on a financial level, but also for people and communities across the country.

In many cases, the property transactions being brought into being by bridging finance solutions are helping to create much-needed residential accommodation and facilities.

For example, we have recently completed our largest bridging deal to date to provide a multi-million-pound lending facility for a project to create over 100 affordable homes in the West Midlands.

The timeliness which the bridging finance solution presented was crucial in this case because of the need to support the redemption of an existing lending facility which was due to expire.

In cases like this, and many others across the country, bridging finance is really living up to its name by breaking down divisions and helping to ensure that property and people are brought together.

* Rob Lankey is Chief Commercial Officer at GB Bank, which offers flexible finance solutions to SME property developers and investors.

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THE North East’s newest bank has been putting its purpose-driven values into action with over £6m worth of investments in its regional heartland in the past year.

GB Bank, which is based in Middlesbrough, received its full banking licence in August 2022.

Since then, the Bank has been delivering on its promises of building and regenerating commercial and residential properties in local communities right across the region.

The Bank has backed experienced SME property developers and investors by funding residential and commercial projects everywhere from Morpeth to Bishop Auckland, providing over £6m worth of vital approved finance to help kick-start or refurbish developments.

The North East investments form part of almost £60m of approved lending across the country and over £32m of new loans out of the door over the past 10 months.

GB Bank CEO and co-founder, Stephen Lancaster, said: “When we started the Bank, we said it was driven by its purpose – to build better futures for the communities who need it most.

“Just over a year into our life as a fully licensed bank, I’m delighted to say that thanks to the hard work of our fantastic team and the vision and determination of our customers, we are helping to do exactly that.

“Our key focus is to provide lending solutions to help bring much needed community developments to life.

“This has been the case with our lending in the North East and throughout the country, which has taken in projects from Northumberland to Norfolk and everywhere in between, but as a bank based and built in the North East, it has been particularly pleasing for us to have made a difference in this region.”

On the residential development side, GB Bank recently provided one of its residential bridging solutions to Newcastle-based developer Modo Bloc to help bring two Gateshead properties back to life.

The Bank managed to turn the deal around from initial enquiry to drawdown in less than six weeks. 

The two properties are now being refurbished and brought up to a higher standard of accommodation and their prominent location will mean they can be retained as a long-term investment for the borrowers.

The funding package is also set to unlock further community investment since Modo Bloc donate £2,000 to homeless charity Oasis Community Housing for every new house or two flats that they sell.

In Northumberland, bridging finance from GB Bank is helping complete a property which has lain unfinished for over two years.

A funding package for experienced property developers Dale and Jo Robinson is enabling them to finish building the final property on a housing development set in Mitford, near Morpeth.

Dale and Jo had originally gained the planning for the single property as part of an overall planning approval for the whole of the scheme which was created by a local developer.  They subsequently sold their land with planning approval to another local developer to receive payment once the completed property had been sold.

However, this home was only partly completed before work was stopped in 2021, leaving it the only unfinished house on the development. It can now be finished with the help of GB Bank’s funding.

The Middlesbrough-based bank is also helping to finance commercial developments in the region.

The Bank provided bridging finance to enable a previously vacant unit in Bishop Auckland, County Durham, to be refurbished and brought back into use.

GB Bank agreed the financing with developer Ellway Group, which is leasing the unit to a business, helping breathe new life back into Newgate Street in the town centre.

Stephen Lancaster said: “We’ve been lucky enough to work on deals all over the country and it’s great to see some of these community regeneration projects start to come to life.

“However, this is just the start for GB Bank. We have ambitious plans to fund many more transformative developments in the North East and across the country and we can’t wait to continue this fantastic work.”

Further information on GB Bank’s purpose can be found at Our Purpose – GB Bank

Category News

With the resolutely sullen skies creating a damp and drizzly summer, you might be forgiven for thinking that the forecast for the UK property sector is similarly gloomy.

After all, we now have the base rate at a 15-year high of 5.25%, fixed-rate mortgages are averaging around the 6.3% mark and Nationwide recently reported the steepest monthly house price fall in 14 years.

However, while no-one is pretending that the current economic climate is particularly sunny, there are reasons to be optimistic about the outlook.

Interest rates: not all bad news

Higher interest rates make borrowing more expensive, which makes people less able to afford to buy goods and services, particularly when it comes to property.

However, higher rates are better than uncertain rates – it’s easier for everyone to deal with a stable environment of higher rates than an unstable environment where no-one can guess where rates will go, as happened last autumn.

Mortgage rates are starting to stabilise and there are thousands more mortgage products available now than there were last autumn – around 5,000 different deals are currently out there compared with around 2,500 in October in the immediate aftermath of the Truss/Kwarteng budget.

Higher interest rates for borrowers also means higher interest rates for savers, making savings accounts more attractive in terms of returns.

This is certainly something which we have seen with our own savings products, which have attracted over £330m in deposits since the start of the year. This in turn helps us to provide more lending solutions to the SME property developers and investors which form the bedrock of our customer base on the lending side.

Lending on the rise

Talking of lending, our enquiry, approvals and completions tallies are all increasing, despite the well-publicised challenges in the property sector.

Our range of short-term and long-term financial solutions are being used for everything from building much-needed residential housing to remodelling commercial units at a business park or transforming retail units on a town centre high street.

Unmet needs – of all kinds

While interest rates are higher and mortgages more expensive than they have been for some time, the fundamental truth about the UK property market is that there are currently not enough homes for the people who want to live in them.

This mismatch in demand and supply – a classic unmet need – helps to increase both the cost of buying a home and the cost of renting one. The Office for National Statistics has reported a near 4% average annual rise in rents, with properties in popular urban locations attracting larger rises.

Rising rents spell potentially larger returns for landlords, helping to fuel investment in the Build to Rent (BTR), which reached a record £6.4bn last year, a total expected to be surpassed in 2023.

Planning for growth

For the first time in a long time, the political direction of travel is starting to look more favourable for property development.

Levelling Up Secretary Michael Gove has admitted that more homes are “desperately needed” in the UK and recently announced plans to relax planning regulations converting empty retail premises and betting shops into flats and house.

Labour leader Sir Keir Starmer has also vowed to “back the builders not blockers” by building more homes on green belt land and bringing back housing targets.

As ever, political promises come with a caveat of ‘wait and see’ but the direction of travel from both main parties is encouraging.

So while the rain may continue to put a damper on the Great British Summer, the outlook for the property sector is starting to brighten.

* Stephen Lancaster is the Co-Founder and Chief Executive Officer at GB Bank, which offers flexible finance solutions to SME property developers and investors.

Category News