Number of office to residential conversions falls by 19% in a year

• Lack of funding and uncertainty over Brexit key factors in the fall
• Alternative finance providers stepping in to fill funding gap 

Saving Stream explains that the lack of funding available to property developers is a key contributor to this decline in conversions in the last year.

Saving Stream says that bank lending to the property sector fell during the financial crisis as banks de-risked their balance sheets, and was further reduced this year following the Brexit vote.

Saving Stream adds that even the newer challenger banks have reduced their lending to the property sector, which has left many developers without the funding necessary to start major developments.

The shortage of housing in the UK remains a critical issue, and rules surrounding office to residential conversion were relaxed in 2013, and made permanent in April 2016 with the purpose of tackling the housing crisis.

However, Saving Stream adds that without the funding necessary to get projects off the ground, developers have not been able to make the most of these changes.

Saving Stream says that, in addition, uncertainty over how Brexit might affect property prices, particularly in London where a high proportion of buyers are from overseas, has also contributed to the fall in conversions over the last year. Some developers will have put projects on hold in order to determine their viability following the referendum result.

Saving Stream explains that developers needing to secure funding for projects such as office to residential conversions are now turning to other forms of finance such as P2P lending or private investment.

Liam Brooke, Co-Founder of Saving Stream, comments: “When there is a clear need for more residential development across the UK, it’s surprising that the number of conversions has fallen over the last year.”

“Office to residential conversions tend to be very successful- and with the relaxing of the rules made permanent early in 2016 we would have expected the number of conversions to be on the rise.”

“However, developers need to have ready access to finance in order to get these projects off the ground.”

“The lack of bank funding available to developers presents an opportunity for other alternative forms of finance providers to step in and fill this gap.”

“Indeed, since the Brexit vote banks have reduced their exposure to the property market even further giving private investors access to better investment opportunities.”

“Densely populated areas such as London and the South East have been particularly badly affected by the housing crisis. In these areas, however, there are also likely to be higher amounts of redundant commercial buildings which could easily be converted.”

“We’ve successfully helped to fund a number of projects converting vacant office buildings into residential spaces such as Old Hall Street in Liverpool City Centre with a loan of £3.8m.”

Notes to editors

Alternative finance providers, such as peer to peer and other crowdfunding platforms, are increasingly stepping into the gap created by traditional banks’ withdrawal. They are giving developers the opportunity to get their projects off the ground in a sensible timeframe.

Peer to peer lending is beneficial for investors, as well as developers, and people are increasingly turning to peer to peer in order to obtain a better yield from their investments in the current low interest rate environment.

For example, the average cash ISA at a bank now only offers annual returns of 0.74% (source: Bank of England). This level is extremely low and it is no surprise that people are looking for a better option.

The outlook for the property market is good. Despite traditional banks’ withdrawal from lending, it is important developers realise that other options are available to them. Peer to peer lending allows important development projects to go ahead and is beneficial to individual investors.

About Saving Stream

Saving Stream is one of Europe’s largest and fastest growing peer to peer secured lenders, providing property finance and development loans. Since it was founded in 2012, it has grown to over 14,000 registered users. Investors on the Savings Stream platform have enjoyed a gross annual return of up to 12%, before tax, and received a total of £18.8 million in interest. Since inception, more than £250 million of funds have been provided for UK property investments.

All loans made through Saving Stream’s platform are secured by legal charge over UK property and loan amounts never exceed 70% of the properties’ Open Market Valuations undertaken by independent valuers; however, investor’s capital is at risk should a borrower default. Funds lent through a peer to peer website are not covered by the Financial Services Compensation Scheme (FSCS), although Saving Stream maintains a substantial discretionary provision fund to assist in making up any recovery shortfalls.

Whilst no Saving Stream investor has been subject to any loss of capital, past performance is not a guarantee of future performance. Please obtain independent advice if you are in any doubt as to whether this platform is suitable for you or if you require tax advice. Please see our full risk assessment https://savingstream.co.uk/risk. Unallocated investor funds are held in a segregated client money bank account.

Saving Stream is a trading name of Lendy Ltd, a company registered in England and Wales under number 8244913 with its registered office and principal place of business at Brankesmere House, Queens Crescent, Southsea PO5 3HT. Lendy Ltd is authorised and regulated by the Financial Conduct Authority (FCA), number 654326, and is registered with the Information Commissioner’s Office (ICO), number Z3404040.

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