# Technology will kick-start the UK housing market
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-06
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Overcoming Challenges in Accessing Development Finance in
Meta Description: Discover the difficulties developers face in accessing commercial funding for building projects, and how a digital solution can streamline the process.
URL: https://financedigest.com/technology-will-kick-start-the-uk-housing-markethtml

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_By_ **_Ian Humphreys,_** _co-founder and head of lending,_ [_Brickflow_](http://www.brickflow.com/)

When Chancellor Rishi Sunak made his first Mansion House speech in July 2021, he called for financial services provision across the UK to be ‘more open, more competitive, more technologically advanced and more sustainable’.

Many companies within the financial services sector believe they are making great progress in supporting Open Finance, creating open ecosystems and sharing [data on digital](https://www.financedigest.com/why-data-is-the-best-weapon-in-the-war-for-digital-talent.html "Why data is the best weapon in the war for digital talent") platforms, but this doesn’t appear to be the case for commercial lenders, particularly providers of development finance, where it is still difficult for property developers to access funds.

[Developers have not had the luxury of being able to shop](https://www.financedigest.com/whats-better-than-openai-developers-shop-for-alternatives.html "What’s better than OpenAI? Developers shop for alternatives") around and compare lenders’ offers in the same way they would other financial services products, such as residential mortgages, bank accounts, credit cards or insurance, yet these are the people who need a digital solution most.

They’re unlikely to have the time, energy, knowledge or inclination to assess and compare the numerous [commercial lending options](https://www.financedigest.com/funding-options-bolsters-senior-team-with-appointment-of-new-commercial-director.html "Funding Options bolsters senior team with appointment of new Commercial Director") currently available, so what options do borrowers have?

They can:

-         Input ‘development [finance’ into a search engine and be overwhelmed by the results – banks](https://www.financedigest.com/tomorrows-finance-the-latest-innovations-in-open-banking.html "Tomorrow’s Finance: The Latest Innovations in Open Banking"), mortgage advisers, brokers and specialist firms all offering ‘solutions’ in isolation.

-         Contact an introducer, specialist firm, other professional [services provider](https://www.financedigest.com/nets-acquires-polish-online-payment-service-providers-dotpay-ecard-from-mci-capital.html "Nets acquires Polish online payment service providers Dotpay/eCard from MCI Capital"), such as an accountant or estate agent, or maybe a friend.  Introducers, such as mortgage brokers or advisers, must be briefed on everything, including property details, planning situation, land/build costs, estimated [selling price](https://www.financedigest.com/vhs-tapes-selling-for-46000-higher-than-original-price.html "VHS tapes selling for 46,000% higher than original price") and borrowing amount. Having [shared this information with one lender](https://www.financedigest.com/u-s-mid-tier-lenders-shares-rise-in-frankfurt-after-svb-deal.html "U.S. mid-tier lenders shares rise in Frankfurt after SVB deal"), introducers will spend time repeating the process in order to obtain comparable quotes.

-         Contact lenders used before. If they’ve raised money for other projects, developers may return to the same source (blissfully unaware a better [deal can be secured](https://www.financedigest.com/incentive-fm-secures-new-deal-with-dollar-uk.html "Incentive FM Secures New Deal with Dollar UK") elsewhere).

**_Fragmented market_**

Being able to source and easily access commercial funding is fundamental to kick-starting a building project and helping the [Government meet its target to build 300,000 new homes per year](https://www.financedigest.com/2016-must-be-the-year-of-board-level-transparency-and-good-governance.html "2016 must be the year of board level transparency and good governance"). Yet the process remains difficult.

Chasing development finance, arranging meetings, showcasing experience and repeatedly answering questions about the project – ie the property, planning situation, land/build costs, selling price, [profit margins](https://www.financedigest.com/inflation-boosts-jeronimo-martins-q4-profit-but-dents-margins.html "Inflation boosts Jeronimo Martins’ Q4 profit but dents margins"), overall valuation, borrowing requirements and where the deposit is coming from – takes months.

Overlay this with different lending criteria, most lenders work off the gross development value and will lend a percentage of that (it varies between 55% and 75%), changing geographical limitations, [building specifications and experience requirements](https://www.financedigest.com/whats-required-of-accounting-to-build-a-better-tomorrow.html "What’s required of Accounting to build a better tomorrow"), and it’s easy to see why developers are overwhelmed and unable to compare these variables.

Third-parties such as brokers or introducers [face similar challenges; they need to regularly update their databases to keep track of the ever-changing lending criteria of 50+ development finance providers, pricing/policy variations and new products coming onto the market](https://www.financedigest.com/under-saved-and-underprepared-women-face-challenges-saving-for-retirement.html "UNDER-SAVED AND UNDERPREPARED: WOMEN FACE CHALLENGES SAVING FOR RETIREMENT").

The process is equally cumbersome for lenders; their differing [lending criteria around loan](https://www.financedigest.com/peer-to-peer-lending-how-to-use-p2p-lending-for-loans-and-investments.html "Peer-to-Peer Lending: How to Use P2P Lending for Loans and Investments") size, deposit requirement, geography, asset type and borrower profile means they are inundated with inappropriate enquiries, resulting in low loan conversion rates of around 5%.

With such a fragmented market and so many variables, [it’s no surprise to find the Federation of Master](https://www.financedigest.com/why-its-time-to-adapt-to-the-virtual-world-how-to-master-online-negotiations.html "Why it’s time to adapt to the virtual world: how to master online negotiations") Builders, in its 2021 Housebuilders’ Survey, found one in three housebuilders cite ‘a lack of finance’ as one of their biggest barriers to progressing projects.

[**_Tech innovation_**](https://www.financedigest.com/setsquared-helps-turn-basingstoke-into-the-souths-next-tech-and-innovation-hub.html "SETsquared helps turn Basingstoke into the South’s next tech and innovation hub")

As is familiar with many challenges, the answer lies in technology. In October 2020, Brickflow – the UK’s first [comparison site for development finance – launched](https://www.financedigest.com/new-charitable-commission-sharing-model-is-for-lifeprice-comparison-website-launch-bolstered-by-innovative-approach.html "New charitable commission-sharing model is for lifePrice comparison website launch bolstered by innovative approach").

Its [online tools and development](https://www.financedigest.com/the-benefits-of-developing-online-stores-through-shopify.html "The Benefits of Developing Online Stores Through Shopify") finance experts:

-         Enable [borrowers to showcase their experience/projects and check the viability of sites online before going to see](https://www.financedigest.com/almost-a-third-of-consumers-see-default-as-the-responsibility-of-lenders-not-the-borrower.html "Almost a third of consumers see default as the responsibility of lenders – not the borrower") them.

-         Apply for funds.

-         Compare estimates from compatible lenders (ranked by loan size and price, helping borrowers [improve their Return](https://www.financedigest.com/daimler-truck-sees-higher-returns-as-supply-chains-demand-improve.html "Daimler Truck sees higher returns as supply chains, demand improve") on Capital Employed).

-         Return completed project appraisals to up to five lenders to bid on.

-         Select the best [loan terms and continue with the final application process which culminates in credit](https://www.financedigest.com/6-reasons-to-take-a-car-loan-from-a-credit-union.html "6 Reasons to Take a Car Loan From a Credit Union") being approved.

The [digital platform delivers](https://www.financedigest.com/you-cant-get-faster-than-that-spring-statement-update-delivered-digitally-as-it-happens-with-app-driven-technology.html "‘You Can’t Get Faster Than That’ – Spring Statement Update Delivered Digitally As It Happens with App-driven technology") estimates from more than 35 lenders’  in two minutes (this  would take several weeks if completed manually), and typically finalises the whole credit approval/final loan offer process in six weeks (as opposed to the usual six months).

Having searched and stored 121 pieces of data from each of its 37 lenders ( [representing 70+% of the market](https://www.financedigest.com/ab-property-marketing-appointed-to-represent-spanish-real-estate-law-specialists-fuster-associates.html "AB Property Marketing appointed to represent Spanish Real Estate Law specialists Fuster& Associates")) and by using proprietary algorithms, the platform instantly selects lenders likely to make a loan offer, resulting in a 95+% conversion rate from Heads of Terms to completion.

And with borrowers able to compare estimates from compatible lenders, ranked by loan size and price, it improves their Return on Capital Employed, often saving them  hundreds of thousands of pounds, which can be ploughed back into more [property development projects](https://www.financedigest.com/taylor-fay-homes-recruit-cordant-projects-for-innovative-property-initiative.html "Taylor Fay homes recruit Cordant Projects for innovative property initiative").

The benefits to the wider industry are clear; a more [efficient funding process](https://www.financedigest.com/1-easy-tip-to-make-a-key-e-commerce-process-more-efficient.html "1 easy tip to make a key e-commerce process more efficient") saves time, money and resources, enabling all stakeholders to do their job better. And the more efficient the borrower and lender, the greater the gains for the UK [housing market](https://www.financedigest.com/uk-housing-market-weakness-continues-improvement-on-the-horizon-rics.html "UK housing market weakness continues, improvement on the horizon – RICS").


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