Like many areas in the UK, North East England has a growing need for more high-quality and affordable housing. The North East Strategic Economic Plan sets out the aim to build 6,000 housing units per year until 2024 to meet demand, respond to demographic changes, and ensure there are attractive housing options for current and potential residents. Increasing the availability of industrial and commercial property is also key to job creation and the economic growth of the region.
It’s not only major property developers that are helping to meet this demand. Smaller construction and property development companies are playing a crucial role through designing and building bespoke projects in the region.
However, raising capital to get these projects off the ground can sometimes be challenging. For a smaller business, it can be difficult to access development finance from traditional sources. This is where the North East Property Fund comes in.
What is the North East Property Fund?
The North East Property Fund is a £10 million fund, conceived and managed by FW Capital and backed by the North East Local Enterprise Partnership and Santander. It was set up with the aim of supporting the development of small-scale property schemes, which may otherwise have struggled to get the finance they need.
The fund offers development funding to SME house builders, construction and property development companies to bring forward residential and non-speculative commercial development projects in the North East LEP area. This covers the seven local authority areas: Northumberland, County Durham, Gateshead, Newcastle upon Tyne, North Tyneside, South Tyneside and Sunderland.
It can be used for:
- New housing schemes
- Refurbishment schemes
- Mixed use schemes
- New office, industrial and warehouse developments
- Phased developments
The fund can reinvest returns into future projects, with the potential to provide over £30 million of finance over the next five years.
What are the key features of the fund?
- It offers short-term loans between £250,000 and £1 million
- Loans are to fund development costs
- Repayment terms are available up to two years
- There is no minimum size of development
- Interest roll up is available
- Interest rates / fees are agreed in advance
How is it helping?
So far the fund has supported the construction of 51 new homes and nearly 15,000 square feet of commercial space, and has helped to create 16 jobs and safeguard 7.5 jobs. FW Capital has worked with nine property development businesses and has invested a total of £5.9 million through the fund.
Homes by Carlton is one of the businesses that has secured investment from the fund. The house builder and property developer, known for the high quality and prestige of its developments, used a £1 million loan to finance the construction of nine family homes in County Durham. This development has created six jobs and safeguarded jobs in the local supply chain.
Another residential scheme to get financial support from the fund was a development by W&D Christie Developments Ltd. With the help of a £750,000 loan, it transformed the site of a former garage into 14 eco-friendly homes in Houghton-le-Spring. Aimed at first-time buyers, couples and young families, the homes are designed to be affordable and will benefit the local community for years to come. The scheme is already proving popular, with five properties sold since launch.
A high-quality office development has now recently been completed with the help of a £500,000 investment – the first commercial development to benefit from the fund. Leading North East property developer Peter Candler secured the loan to finance the completion of the Rivergreen Centre office development at St Mary’s Park, near Morpeth. The centre has ambitions to become a regional hub for business and has the potential to create 80 jobs once the site is fully occupied.
Tony Cullen, Investment Executive on the North East Property Fund at FW Capital, says: “By unlocking finance for smaller property developers, the fund is helping to tackle the need for more high-quality residential and commercial properties across the North East. This in turn is driving economic growth, including local job creation.
We’re delighted that nine property development companies have already benefited from the fund, using the finance for projects that will have a positive impact on local communities for years to come. We welcome more property developers to get in touch and see how we can help.”
If you’re interested in learning more about the fund and how we can support property developments in the North East, get in touch with Tony Cullen or David Pesarra from our property team via [email protected] or [email protected].
