GBB to increase supply of property development finance

14 Feb 2020

The launch of a new bank aims increase the supply of property development finance to the UK, specifically in the regions and starting in the North.

GBB is led by an experienced management team and has this month formally applied to the Prudential Regulation Authority (PRA) for a licence to trade as a bank. It intends to provide tailored lending to regional SME property developers for both residential and commercial property development, and fixed rate savings products to retail customers.

The NHBC New Home Statistics Review, 2018, illustrated that the volume of new housing completions grew in 2018 in all UK regions except for London.

In addition, when introducing their guide for SME housebuilders in 2018, UK Finance spoke of the need to reverse the swing that that saw the percentage of development projects completed by firms outside of the largest 10 firms fall to 53%. GBB believe that both of these factors will lead to an increase in the demand for finance from SME property developers and construction companies.

GBB will offer secured property development loans of between £1m and £5m, with 90% of lending supporting regional property developers and SME construction companies.

For savers, highly competitive fixed rate deposit rates will ensure strong appeal and that customers achieve competitive returns.

Steve Deutsch, GBB’s Chief Executive Officer, said: “The UK’s undersupply of housing offers a clear market opportunity. We know that 66% of property developers are borrowing now, with 90% intending to borrow in the next three years.

“Our ambition is to become an engine of economic growth for regional SME developers by providing bespoke secured finance underpinned by long-term relationships that build trust and generate repeat business.

“This will be funded by highly competitive fixed term savings products, aimed at customers looking to deposit between £5k-£100k of savings. We want to be a reliable source of income for savers in the easiest possible way.

“Our lack of legacy systems or branches and a model that is supported by modern technology results in a low-cost income ratio that benefits customers and investors alike.”

Chief Lending Officer for GBB Stephen Henman, said: “Our key differentiator is our regional and property development focus combined with a relationship centred approach, which is unlike anything else on the market. This, combined with our specialist underwriting capabilities, local knowledge and market-leading, cloud based technology, puts clear water between us and other providers. We hope that this will lead to an increase in property development in our target regions.

“Our locally based Relationship Managers will be dedicated to onboarding customers, understanding and managing their ongoing needs and gathering market intelligence to ensure our support evolves with our client requirements. We value repeat business and see the benefit of long-lasting relationships for the customer and the Bank. As such customer service has been placed at the heart of this new GBB proposition to drive strong returns from the outset for our investors.”

Headquartered in Newcastle-upon-Tyne, new premises are currently being secured that will allow GBB to triple its employee headcount to in excess of 60 in readiness for launch in 2021.

Chief Executive Officer, Steve Deutsch, said: “Incumbent banks lack relationship support and lending appetite for SME development finance. We are going to change that and provide competitive returns for savers.

“Right now, we have a laser focus on raising the finance to complete the bank build and provide the initial regulatory capital required for the launch. This, with a move into new premises and further expansion of the team means we’ll be ready to launch in 2021.”