Wellesley doubles fourth-quarter lending to £107m
WELLESLEY Group has reported £107m of lending in the final quarter of 2017, which is almost double the amount lent in the same period the previous year.
The alternative property lender said on Tuesday that the funds will support the construction of over 700 new homes across the UK. It provided finance to nine housebuilders over the last three months of 2017, with an average loan size of £11m.
In the last quarter of 2016, Wellesley lent out £54.6m.
Wellesley re-positioned its business in 2016, targeting the more affordable end of the housing market. It said that 70 per cent of these new houses built with Wellesley funding will be sold for £300,000 or less.
“The 2017 Budget contained several measures which demonstrate government support for housing up to this price point which is expected to further underpin this segment of the market,” Wellesley said.
As part of its shift in strategy, the lender has also moved away from smaller, bridging type deals and towards larger development loans.
“We identified back in 2016 the strong demographics supporting demand for lower value houses and the need for such housing right across the UK, so today less than 20 per cent of Wellesley’s loans are for London housing,” said chief executive Graham Wellesley.
“We are also making fewer but larger loans (with an average of £11m per loan) to quality independent house builders. The continued strong demand for our loans demonstrates the appropriateness of our strategy.”
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“In 2016 we delivered a 4.49 per cent investment return on average to our investors and so far in 2017 the investment return is expected to be similar,” said managing director Andrew Turnbull.
“Wellesley’s busy final quarter with £107m of loan commitments indicates that the lower end of the housebuilding market remains robust. In the medium and longer term this market segment is underpinned by strong demographics.”
The company put its peer-to-peer lending business on pause earlier this year, as it works towards gaining full Financial Conduct Authority approval. It currently offers a property mini-bond and an innovative property bond that can be held in an ISA wrapper.
Founder Graham Wellesley told Peer2Peer Finance News that the firm will re-launch its P2P platform soon, although it does not have an exact date scheduled.