Burnage deal signals lender appetite for northern development schemes

Recognise Bank's £2.66 million bridging facility for a 66-home development in Burnage represents more than another routine development finance deal—it signals robust lender confidence in Manchester's residential market and the broader northern development pipeline. The 12-month facility, structured at 65% loan-to-value, demonstrates that specialist lenders are backing regional developers with competitive terms that would have been difficult to secure just two years ago when development finance markets tightened considerably.

The Burnage location proves particularly astute from an investment perspective. This south Manchester suburb has experienced significant gentrification over the past five years, with average house prices rising 23% since 2019 according to Land Registry data, outpacing the Greater Manchester average of 18%. The area's proximity to Manchester Airport, combined with ongoing infrastructure improvements including the Metrolink extension proposals, positions new-build developments for strong capital appreciation. With planning permission already secured for 66 homes, the developer has de-risked the project significantly, making it an attractive proposition for bridging finance providers seeking lower-risk exposure to the residential development sector.

This deal reflects broader market dynamics that favour regional development schemes over London-centric projects. Development finance lenders are increasingly targeting northern cities where build costs remain 15-20% lower than southern equivalents, whilst demand from both owner-occupiers and buy-to-let investors continues strengthening. Manchester particularly benefits from its expanding tech and professional services sectors, creating sustained housing demand that supports development viability. The 65% LTV ratio achieved here suggests lenders view Greater Manchester residential schemes as relatively low-risk propositions, a marked contrast to the 55-60% ratios commonly seen for similar projects in less established markets.

For buy-to-let investors monitoring the Manchester market, this development signals continued institutional confidence in the area's rental prospects. Burnage's rental yields currently average 6.2% for modern properties—considerably higher than London's 3.8%—whilst benefiting from strong tenant demand driven by Manchester's growing professional population. The completion of 66 new homes will add quality rental stock to a market that has seen rental inventory decline 12% over the past year, potentially supporting further rental growth for existing landlords whilst offering new investment opportunities once construction completes.

The involvement of Recognise Bank, which has carved out a specialist niche in development finance, indicates sophisticated capital is flowing toward regional projects with clear delivery timelines. Their willingness to provide 12-month facilities suggests confidence that construction can complete within budget and schedule—critical factors given rising material costs and labour shortages affecting the sector. This financing structure allows developers to move quickly on viable projects whilst maintaining sufficient equity buffers to handle potential cost overruns or market softening.

Looking ahead, this transaction pattern will likely accelerate across Manchester and similar northern markets throughout 2024. With the Bank of England's interest rate trajectory showing signs of stabilisation, development finance costs are becoming more predictable, encouraging lenders to deploy capital in regional schemes with strong fundamentals. Cities like Birmingham, Leeds, and Liverpool are positioned to benefit from similar financing flows, particularly for developments targeting the growing professional renter demographic that underpins rental market strength across these urban centres.

The Burnage deal ultimately demonstrates that regional residential development remains a viable asset class for both developers and their financing partners, provided projects meet quality and location criteria. With house prices in Greater Manchester still trading at significant discounts to southern markets whilst offering superior yields, developments like this 66-home scheme represent the type of opportunity that will define the next phase of UK regional property growth. Developers who can secure sites with planning permission and access competitive bridging finance will capture the strongest returns as northern markets continue maturing.