A residential street in Notting Hill in central London, Britain, in this October 8, 2013. REUTERS/Toby Melville
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Lenders are charging higher interest rates for development loans for London luxury homes as slumping commodity prices and increased taxes deter overseas buyers, fueling concern the market is oversupplied. Debt funding construction of the costliest homes has increased by about 75 basis points to 3.75 percentage points over benchmarks since January, said Randeesh Sandhu, chief executive officer of residential development lender Urban Exposure Real Estate PLC. Dragonfly is now avoiding financing the development of the largest and the most expensive luxury homes, Posniak said in a telephone interview. It has also reduced the amount it will lend for the construction of a luxury homes project from around 85 percent to 80 percent, he said.Average interest rate margins for U.K. housing developments fell to 381 basis points from 453 basis points in the 12 months through June, according to a survey of lenders by De Montfort University.
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