Close Brothers Property Finance (CBPF) and Barwood Capital have teamed up to create an innovative development finance model aimed at assisting SME housebuilders. This new approach helps both organizations manage risk while providing smaller builders with better access to the financial resources they need, particularly important as interest rates remain elevated.
The partnership offers SME housebuilders a combination of equity and senior debt, with Barwood Capital supplying the equity and CBPF providing senior debt. This allows builders to secure more land and increase home production. The model has already seen success on over 20 sites, helping deliver 230 homes with a Gross Development Value (GDV) of £130 million.
Most recently, Hurst & Hurst Estates utilised the loan partnership for a development in the New Forest National Park. This project, with a GDV of £13.5 million, will deliver 46 energy-efficient homes on a six-acre site—50% of which will be affordable housing. The development addresses critical housing needs in a picturesque rural location.
Barwood Capital are also currently partnering with Surrey-based housebuilder Kidbrook Homes, on a luxury apartment scheme in Kingston Hill overlooking Richmond Park, also funded by Close Brothers. Kidbrook were the first SME to work with Barwood Capital on this bespoke model and a recent acquisition in Godalming makes this the eleventh development project they have acquired together.
Equity and finance have long been cited as major barriers to entry and growth for SME housebuilders. In fact, 27% of SMEs identify development finance as a major barrier to delivery . As a result, by removing that barrier, this groundbreaking model has the potential to boost SME housebuilding production at a time when supply is historically low.
Simon Davey, Business Development Director, Close Brothers Property Finance, commented: “SMEs are known for delivering high-quality, sustainable homes that create significant economic benefits for local communities by leveraging local supply chains and apprentices. By partnering with Barwood Capital to create this new lending model, we’re able to provide SME housebuilders with access to both senior debt and equity whilst diversifying risk and removing key barriers to development opportunities—all at a time when the housing shortage remains acute.”
Steve Chambers, Director and Head of Residential, Barwood Capital added: “Barwood Capital has been partnering with SME housebuilders for over 10 years, by providing equity for their projects and working together to deliver some exceptional family homes across the UK. Our tried and tested funding model with Close Brothers, will expedite our existing developer partnerships and generate new ones, which will only bolster the UK’s requirement for new homes.”