Siobhan O’Donnell
Hayden McMullen Mark Hawthorn
Neil Tague Caron Schreuder
Mark Roberts
Chris Fortune Ben Jenkinson
Darren Reynolds
Since our first issue, whilst conditions have remained challenging, the collective endeavours of the market continue to impress. Builders want to keep building and, with some exceptions, lenders want to help— we know this as we have projects progressing with plenty of them!
First up in this issue, our partner lender Sancus shares their story. Where have they come from? Where are they now? Where are they going? Richard Whitehouse and Jaxon Stevens tell all and illustrate just how important SME developers are to their business; this common purpose is at the heart of our growing relationship.
Lee Jackson then introduces WholeHouse, Travis Perkins’ revolutionary new offering which allows SME developers to fully design and cost houses online. Having attended the launch event in March where we heard from an SME who was already building some fantastic new
homes in Somerset using the platform, it is clear to me that this system is potentially game-changing.
Our feature article sees us delve deep into the world of finance brokers—an expensive luxury, or more important than ever? Once you have read the views of our experienced panel, it’s for you to decide. At LDS, we work with quality brokers who package our Sales Guarantee with senior debt to deliver high geared and low risk funding, allowing developers to build more whilst reducing risk.
Rounding things off, our Investment Committee chair Gordon More shares some eye-opening market reflections including around planning and government regulation. Informed by his time as CEO of Homes England and his current work on the boards of both builders and capital providers, Gordon is always insightful and never dodges challenging or controversial matters.
Enjoy the issue, have a crack at the competition (the prize is certainly worth winning) and do get in touch to let us know what you think.
“ We work with quality brokers who package our Sales Guarantee with senior debt to deliver high geared and low risk funding, allowing developers to build more whilst reducing risk ”
Hello and welcome to the second edition of LDS Boost—bringing SMEs the knowledge and resources of PLCs.
Ben Jenkinson, Regional Director (London & South)
“Straightforward property finance” is a tagline used by Sancus, and, really, that sums it up nicely.
This is a business built on the real estate finance know-how of an experienced senior team, prepared to back its judgment rather than rely on formulas.
Much like LDS, Sancus puts great value in building relationships, gaining an understanding and insight into how the people it works with like to operate. It’s a method that has served it well, with £1.2bn successfully lent in recent years, supporting an appetite to accelerate the growth of SME developers of all sizes with loans of between £1m and £15m.
Sancus was launched in 2013 as a response to the financial crash—not unlike other alternative finance providers. Primarily, it aimed to serve real estate borrowers in the Channel Islands where two of the main high street banks were dominant.
The backing for the lender came from a mix of its own equity, high net worth individuals and family offices, all of which remain key ingredients in the mix today. The largest shareholder is the Somerston Group. A business was launched in Ireland in 2018, and a UK operation began in 2019.
Richard Whitehouse joined in 2016, becoming Managing Director (UK) in 2022. He says: “In the senior team at Sancus, there’s a wealth of experience among people who’ve been in very senior positions at important institutions, right across banking, construction and development finance.” Whitehouse’s own CV includes roles at RBS and Allied Irish Bank in the UK and Europe.
Jaxon Stevens joined in 2021 to head the sales function, with 25 years served in short term commercial lending. He says: “I like stuff you can get under the skin of, and there’s no better product than development finance for that; there are so many moving parts, and every day is different.”
Each issue, Boost will profile a trusted lending partner of LDS. This time, we spoke with Managing Director Richard Whitehouse and Sales Director Jaxon Stevens at SancusRichard Whitehouse, Managing Director Jaxon Stevens, Sales Director
As to how the business operates, Whitehouse says: “We’re squarely on the side that the team are the product. We’re not about predetermined solutions, like a bank with a credit policy that measures loan quality. Our thinking is more in line with an equity provider.
“Once we commit, we like to back builders delivering homes for people who like living in them, and every action we take is with that in mind.”
The LDS relationship
Whitehouse says: “From the word go, we were impressed by the scale of the ambition LDS have. Like ourselves, they’ve assembled a good team with a breadth of experience. They’ve been generous in sharing networks and making introductions, helping us to solidify relationships, and we’ve been able to support each other in projecting each other’s presence in our sectors.”
The two businesses are literally neighbours in London Bridge, allowing for regular face-to-face dialogue around deals, markets and events.
As Whitehouse says: “It’s handy to have people there to discuss trends and how projects are performing, it all helps to build our own knowledge. At a functional level, both the capital and Sales Guarantees provided by LDS are important to us—really, the value of the relationship comes in both that and the sharing of knowledge.
“Associating closely with another business isn’t anything we, or anyone, should do lightly, as our corporate and personal brands are so important to us, so it shows how comfortable we are working with LDS.”
The borrower, and everyone keen to increase housing supply, can be the winner: “Ultimately, for SME housebuilders, there’s a lot of benefit in working with people who are able to sense-check things and cut through thinking time quickly.”
As Stevens adds: “Outside of the box thinking is integral to everything we do. At any one time, the market has issues,
whether that be a lack of equity, exit concerns, any number of things, and it’s good for us to be able to introduce LDS as a potential solution; there’s a very strong synergy there for us.”
Somerston Group invested £20m in November 2020, with a further equity injection of £2.1m in late 2022. Pollen Street Capital also increased its funding line from £75m to £125m in November last year.
On top of that committed funding, which Sancus uses to underwrite new business and undrawn facilities, it also benefits from a Loan Note programme which is run by an associated company, Amberton Asset Management, and the aforementioned high net worth individuals and investors.
Whitehouse says: “We have always focused on having multiple sources of funding and, importantly, those funding sources have different incentives to deploy capital. We try as much as we can to limit the correlation between different sources of capital, because people act differently at different points of the economic cycle.
“Covid was a great example for us of the benefit of that low correlation. We had funding sources keen to deploy into UK real estate and that allowed us to write a lot of business when we know some of our competitors had to reduce their appetite due to their funding structures. In a market like today’s, we can provide reliability and certainty for developers.”
Sancus is looking to expand both the amount of business it does and the size of its deals. Whitehouse says: “We’re in growth mode; there is a corporate plan to double our loan book over the next 24 months, so we’re looking to differentiate our offering further and strengthen those key relationships, such as with LDS, to make this happen.”
“A recent example of something we’ve worked on is with a developer who, not untypically, is spread a little thin at present, isn’t cash-rich, and needed a ‘day one’ injection. We like the scheme,
we can see there’s a good exit route, and we were happy to provide a good chunk of funding,” Stevens explains.
“We’re working with a few developers who are realigning sites, and we see it as a case of looking at the challenges the market is throwing up together to find a solution.”
Defying expectation, the first part of 2023 has been… OK. As Whitehouse says: “Liz Truss and Kwasi Kwarteng have a lot to answer for, but, actually, enquiries have been at record levels since the start of the year, far ahead of what we’d have predicted in the last quarter of 2022.”
That’s not to say things are easy, though: “Developers have so many complexities to deal with. They’ve gone from Covid lockdowns to a supply chain crisis, labour shortages, cost inflation, the Truss/Kwarteng issues and interest rate changes. It’s no surprise they’re being extra-diligent.
“While developers are displaying caution before pushing the button on schemes, we can definitely say now that things have at least stabilised in some of those areas of concern, such as material availability and cost, so there is a bit more certainty.
“That does still leave the issue of ‘can people afford to buy a home?’ but we’ve not seen a dilution in that area for the type of product we like: good schemes in and around nice locations.”
It comes back to the basics: there are headwinds, but the market fundamentals are still strong, and business is very much continuing for developers ready to look for solutions.
As Whitehouse says: “There are challengers for developers, but we get a lot of confidence from the likes of LDS being in the market with Sales Guarantees getting projects over the line.
“We’re engaged with developers day in and day out and don’t get any sense they’re reluctant to build—they’re just being diligent. The mood music as we read it is that developers want to progress sensibly.”
This could be big. A major investment for Travis Perkins, WholeHouse is a first for the housebuilding sector, and it means that SMEs can now plan and design a bespoke digital model of a house before physically constructing it.
The model ensures detailed and accurate design, plans and material pricing from day one. Start to finish, the process can be completed in under an hour—saving weeks of work.
Based on BIM, WholeHouse has been developed by Travis Perkins over several years, in partnership with leading industry experts, including architects, engineers and planners, as well as customers and suppliers.
To contact WholeHouse directly, please email lee.jackson@travisperkins.co.uk
The portal is specifically designed for housebuilders building up to 250 units a year, and means they can bring plots and developments to life through 3D visualisation in designs that can be easily adapted, personalised and tailored depending on customer requirements.
We’ve been working with partners on this for the last few years; there have been 40 manufacturers and 20-plus consultancies and designers involved in the wider design team, representing more than 500 years of industry knowledge.
In a sense, WholeHouse has been incubated over 15 years, and brings together the accumulated knowledge of the challenges facing SME housebuilders, manufacturers, subcontractors and customers. This is an industry where 2,500 players are collectively twice the size of the single largest player, but suffer from structural disadvantages. With WholeHouse, Travis Perkins is supporting them in being agile and flexible.
WholeHouse is based around a simpleto-use online portal that streamlines the design process, enabling builders to create costed construction drawings with accurate elevations, floor plans, specifications, cross sections and more at the click of a button—traditionally, many of these items would need to be manually costed from drawings and separate subcontractor quotes.
With the WholeHouse concept, Travis Perkins has created a new model for SME housebuilders. We sat down with director Lee Jackson to find out all about this revolutionary tool
The platform, which works in real-time, collates and automatically processes all relevant information in one place and is fully compliant with the latest regulations and industry standards.
In under an hour, WholeHouse can supply housebuilders with an entire set of drawing sheets, up to 200 pages of construction details and a full bill of all the items needed to build a property, saving weeks on design development.
It also reduces risk greatly, which is what lenders want to hear—after all, they are the ones with money on the line.
It adds certainty, too?
It is common that a builder will start a house knowing only about 20% of the actual design is there; they’ll be working off a sheet of paper and the design has to
come together ‘on the fly’. What actually gets built and when can often depend on whether the plumber gets in before the electrician or vice versa, and whether the right furniture or fittings are available on time.
half a billion house types. That’s correct, half a billion. In a way, it is similar to a car configurator, with five chassis types providing the basis for a whole world of choice.
Too often when people talk about value-engineering it’s in a negative sense. This is quite the opposite. The model takes out cost by driving efficiencies, which can be reinvested where it adds value.
Such as where?
Is it important to note this is not a ‘standardisation’ process?
It’s absolutely true that this isn’t ‘standard’ in any way—SME housebuilders rightly pride themselves on not doing ‘standard’. Rather, the portal offers five basic footprints that can then be configured into
One of the potential benefits here is the ability to devote more time to the ‘hero’ plots within a development, those at the boundaries of developments, which need to respond to local nuances and character. With design time freed up, there can be more focus on these, they can be removed from the critical path; you can buy yourself time to get those
“ WholeHouse reduces risk greatly, which is what lenders want to hear ”
designs truly mastered.
Future-proofing and flexibility is key. Design elements such as large windows in kitchen and dining room areas mean that should the home-owner want to extend in the future, that will be made easier, because creating that hole in the wall is often the largest cost. Similarly, extending into the roof space can be facilitated better.
A specific example of simplifying things is concerning door width; with one uniform size, it makes things considerably easier. Builders can always get hold of the supplies they need, without any danger of the programme being disrupted and housebuyers being delayed with moving in.
So, really, it’s about empowering the housebuilder and democratising BIM?
For housebuilders, as things stand, there’s a huge amount of risk in doing anything ‘outside the norm’. What this does is elevate the position of the SME builder in the process. It is a genuine
MMC (modern methods of construction) solution, but delivered in a traditional brick and block style, in a streamlined process that brings in principles from other industries.
In time, we intend to add in other build methods, but this moment is a line in the sand—a value-engineering proposition for building traditionally. Everything becomes an informed choice for the customer. It’s not about Travis Perkins saying, ‘This is the most efficient way to build’, rather, ‘This is what it will cost to do this, and what it will cost to do that.’
Ultimately, this brings digital construction technology to the regional housebuilder, because we believe digital design and BIM has a huge amount to offer to them. We’re not reinventing the wheel in how people work on site, but the future possibilities are mind-blowing: early adopters will be in a really strong place.
Being at the heart of construction, we take great pride in supporting our customers with new value-added services that help them to navigate an increasingly
complex construction landscape with new legislation and decarbonisation targets.
WholeHouse will do just that, and help SME housebuilders, who are the lifeblood of regional property markets, to build better, more sustainable homes quickly and safely, whilst retaining control over the creative design elements and saving time and money.
The WholeHouse launch went even better than expected; there’s really firm interest from people who knew a bit about what we were hoping to do, and real conversations are taking place now.
The first two homes built using the platform will be ready by September and are based in the Midlands. Extensive work has been carried out on pilot schemes across the country. The platform has recently won Best Business Product at the Housebuilder Product Awards.
With his experience as a Managing Director at Lloyds Banking Group and Chief Executive Officer for Homes England, Gordon More has seen pretty much everything in housing.
He is now strategic advisor and investment committee chair at LDS, senior adviser at JLL, and non-executive director at Sigma Capital, Allison Homes and Kingswood Homes. We caught up with Gordon to get his thoughts on how SME housebuilding looks in early summer 2023.
It has been a topsy-turvy time for housebuilding, with the sector going from a ‘hot’ selling market last year, and production struggling to keep up, to a sudden halt following the infamous Kwasi Kwarteng mini-budget in the autumn.
Literally, the market stopped— and it was only in late March that sales have stabilised, albeit at a significantly lower rate than the previous year. So, for housebuilders, and SMEs in particular, what might the coming months bring? Here are some factors everyone should be aware of.
The recent climb down by government in the Levelling-up and Regeneration Bill, with the intention of removing centrally imposed building targets and including more local decision-making, is already slowing down the planning process. Indeed, a number of local authorities have declared that work on their Local Plans is being paused.
This is delaying existing permissions in the planning system and reducing certainty. At a time when housebuilders are tentatively recommencing land purchases, this is another barrier they are facing. This, added to the fact that there are large areas of the country where building is halted as the government struggles to come up with a solution to nutrients in rivers, is keeping land prices high.
While enquiries and visits to sites have improved over recent weeks, sales are running at around 0.55 sales per site, per week (according to figures published by the Home Builders Federation), significantly down on the last 18 months and below the long-term, pre-pandemic average.
Uncertainties over the cost of living, interest and mortgage rates, and inflation (which is still affecting material costs) makes predicting the market in the short-
those smaller housebuilders that rely on raising development finance. This will only strengthen the attractiveness of the LDS Sales Guarantee to support new lending.
Finally, building regulations are evolving at pace, the latest being Part L, which covers the conservation of fuel and power in the building of new homes and establishes how energy-efficient they should be.
From 15th June 2023 all homes that have not commenced by that date will be subject to the new regulations, which require improvements in lighting efficiency and new low-flow temperatures for heating systems, amongst other requirements. All new homes must produce 30% less carbon emissions, a figure that will be increased in due course as the Future Homes Standard comes further into play.
term challenging, all of this is are being factored into appraisals. More bulk and partnership/pre-sold deals are emerging as housebuilders manage this uncertainty. I suspect this will continue in the shortterm until there is more confidence in buyer demand.
Fortunately, there is still little evidence that banks and financial institutions have tightened lending criteria for development lending—although experience tells me that this will happen. The recent banking crisis (with Credit Suisse and US regional banks) will have put credit departments on notice. In any event, with the base rate at 4.5% (and potential for another increase likely) the overall cost of funding is higher and there is a strong probability that increased pre-sales will be a condition attached to lending offers for
So, what does this mean? Different materials, heating sources and increased evidence and testing will be required. For the major housebuilders, with large technical departments and the ability to test and source different solutions, that’s not such an issue. The smaller SME, however, with less in-house capability, requires the support of the wider building community to ensure that they are prepared to meet this challenge.
In the short-term, compliance is likely going to increase cost, which may be difficult to reflect in sales prices and put already squeezed margins under yet more pressure.
To summarise, I foresee a challenging environment until at least late summer, and potentially into next year—and I am by nature an optimist.
If you would like to be put in touch with Gordon, please contact us at boost@LDSyoursite.com
“ With the base rate at 4.5% as of early June (and potential for another increase) the overall cost of funding is higher and there is a strong probability that increased pre-sales will be a condition attached to lending offers for those smaller housebuilders that rely on raising development finance ”
For our second reader competition, Tignanello wine is up for grabs.
All you have to do to be in with a shot of winning is to correctly respond to this question, the answer to which can be found within this issue:
How long does it take to generate a Sales Guarantee on our website?
A) less than two minutes
B) 10 minutes
C) 30 minutes
We hope you’ve enjoyed the second edition of Boost. The magazine exists to bring together thoughts and contributions from people across the housebuilding industry, covering key issues of the day.
It’s our belief that SME housebuilders, their lenders and partner businesses all have expertise they can share that will be
of interest and benefit to people across the market.
In order to make each issue topical and varied, we need contributions.
Whether you’re a planning consultant with an update on pending regulatory changes that people need to know more about, a lender with a new funding solution, or a housebuilder trying out some innovative
Email your answer to boost@LDSyoursite.com by 30 July 2023. Good luck! Just set the
energy-efficiency technologies on a live scheme, we’d love to hear from you— hopefully the first two issues have you given you a flavour of the kind of content we’re looking for.
Please contact
markhawthorn@LandmarkGrp.co.uk with your ideas on what you could bring to future issues.