The Intermediary – October 2026 - Flipbook - Page 66
Q&A
Pluto Finance
Marvin Onumonu speaks with Mario Ioannides,
associate partner at Pluto Finance, about current
trends in development and bridging finance
What trends are you seeing in
development and bridging finance?
Over the last six to 12 months, we have seen
developers being more flexible in their strategies.
Historically, many schemes were purely build-tosell (BTS). Then we saw a shift into build-to-rent
(BTR), which accounted for a growing proportion
of our portfolio. Now, we are seeing more flexibility
– a developer may come to us with a BTS strategy,
which may ultimately become a rental product.
Developers are targeting lower-rise buildings
because of the ongoing uncertainty and length
of time involved in the Gateway 2 application
process. That saves them holding costs and time.
Until the Gateway 2 process is improved, I think
that trend towards lower-rise will continue.
We are seeing activity across quite a wide range
of schemes and developers. We might be funding
a small nine-unit scheme for one developer and,
at the same time, a 300-unit scheme for another.
More recently, we have started to back care
homes, which is very much aligned with our desire
to make a social impact. Our latest UK fund, Fund
VIII, has helped deliver 4,000 homes and an equal
number of jobs.
We have also been targeting schemes that
consist wholly or largely of social homes – social
housing, schemes providing different types of
accommodation for people with specific needs,
such as assisted living. We have expanded our
product range and, in doing so, aim to make a
bigger impact than just building for sale or rent.
The borrowers who drive most activity for us are
seasoned sponsors, strong developers with a good
track record, including operators in areas like care
homes, who have been doing it for many years.
Developers are having to think much more
carefully about how they can add value,
particularly through design, while taking into
account current market conditions. Interest rates
are forecast to increase, and on operational assets,
we are already starting to see a slight softening in
yields. Softer yields can mean a decrease in gross
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The Intermediary | October 2026
development value (GDV). Experienced sponsors
have built in headroom from the outset in their
underwriting. They are realistic about the rental
values they can achieve, so if there is some
softening in yields and GDV is slightly lower than
might have been expected a year ago, they can
factor in some rental growth, given that initial
assumptions were conservative.
We are also seeing more focus on design-led
products. Housing schemes in the regions and
lower-rise flat schemes increasingly need to create
communities where residents look forward to
going home. If you are delivering a product in an
urban area with compelling pricing for buyers and
renters, and people already have easy access to
gyms, cinemas and other amenities locally, the
scheme itself does not necessarily need to include
all of those extras.
How have lender appetite, pricing
and criteria shifted?
We have always operated at slightly higher
leverage than the high street and challenger banks,
particularly on development finance. That is not
something we have suddenly changed in this cycle.
Challenger banks are now starting to move
up their leverage, but that is new territory, so
there can be uncertainty about whether they will
actually deliver on those terms. With us, if we
say we are going to do something, it is going to
be delivered. Pricing remains competitive, but
experienced borrowers are increasingly focused
on other aspects too. They still care about pricing
and leverage, of course, but what they really value
is great customer service, decisiveness, speed and
the ability to deliver.
What impact are rates, build costs
and planning delays having?
Although the Base Rate is currently 3.75% and
rates are forecast to increase, the all-in cost
