Pluto Finance launches £250m lending vehicle to boost London housing

The business will offer developers loans of up to 90% of the development cost of a scheme. The loans will be provided in the form of stretched senior development finance, which combines senior and mezzanine debt and provides more capital to developers than traditional senior debt providers.

Pluto said it aims for its new vehicle to provide £250m worth of loans over the next five years, with loan sizes ranging between £10m and £30 per project. Institutional investors, including Clearbell Property Partners II LLP, have provided initial equity of £100m, which Pluto said it would recycle once developments have completed to enable the provision of £250m of loans over time.

The new business has provided its first loan of £12.1m to a residential development next to the Thameslink Station at Iverson Road in north west London's West Hampstead. Construction of the scheme, which will comprise 33 flats and 3 townhouses, will start in August and is expected to complete in November 2014.

“The launch of this new business is highly opportune," said Pluto Finance chief executive Chris Philp according to reports. "Developers continue to find it difficult to source adequate funding for their schemes. Yet, the number of planning approvals for new homes has jumped over the last year in the wake of the National Planning Policy Framework."

“We are helping to fill the gap left by the large number of banks that have withdrawn from the residential property development finance market in the last five years," Philp added.