Monday 23 May 2016 2:22 am

Commercial development approvals stall in 2016 as lack of finance for small developers bites

Planning permissions for commercial property developments across the UK hit their lowest level since 2009 last year.

The dip has been blamed on a lack of available finance for smaller developers, according to peer-to-peer property funding platform Saving Stream.

Large developments have held steady at 2,000 per year since 2010 though the number of smaller developments has dropped from 11,300 in 2010 to 9,300 in 2015.

However there have also been warnings that the European Union referendum is damaging demand for real estate.

Central London offices have been badly hit by Brexit fears, with investment falling to £2.2bn in the first quarter of this year, down 52 per cent from £4.6bn in the last quarter of 2015 according to commercial estate agency Lambert Smith Hampton.

Saving Stream found that smaller developers are struggling with the limited ability of banks to provide development finance for commercial property, with larger institutions forced to hold more regulatory capital against lending for new developments than for pre-let and pre-sold developments.

“The banks just aren’t able to lend to commercial development on anything like the scale that they once did, and smaller commercial developments are struggling to get off the drawing board as a result,” said Saving Stream’s Liam Brooke.

“The big listed developers still have plenty of access to finance for large office, retail or industrial developments, but it’s a different story for smaller developers looking to get spades in the ground on more modest plans.”