Property Development Finance
Development finance typically takes the form of a short-term bridge loan which enables a developer or investor to purchase and/or develop residential or commercial property. Within this broad spectrum, there are two main areas – newly built property development and the refurbishment of existing property.
Development finance & loans starting from just 0.83%
For those looking at new build schemes, finance for development can be tailored to facilitate the purchase of the land (with or without planning permission) and then provide the funds towards the cost of the build which in some cases 100% of these costs can be provided. Specific property finance solutions are available through a range of lenders.
For clients looking to refurbish properties – perhaps converting an office block into flats or a single dwelling into individual flats – there is a good choice of lenders who will provide the funding required. In some cases, the same lenders who provide funds for new builds will deal with these refurbishment projects. Funds can be arranged for the purchase of the property and the costs of refurbishment and additionally, UK Property Finance can then arrange the longer-term funding required if the refurbished properties are being retained as investments.
Upon application, you will need to present documents to development finance lenders which confirm the viability of the project which will include:
Planning permission, costs for the build/refurbishment, architect drawings/plans, estate agent confirmation of sale/rental prices of the finished properties and details of your experience in the market. UK Property Finance will be on hand throughout the process to assist in packaging the case for presentation to the lenders.
Release of funds
Property development finance is usually released in stages depending on the current value of the project at the time of valuation.
The stages considered by lenders are:
- Land value – we can raise capital against either the purchase cost or the value of the land (if already owned).
- Initial costs including the footings and foundations.
- Wall plate which is the basic external structure of the project.
- Wind and water tight which primarily means the windows and the roof.
- 1st fix includes plastering and the initial installation of the electrics.
- 2nd fix to complete the electrics and any finishing work required such as painting and decorating, landscaping etc.
Anything is possible.
The lender will first look at the following key data:
- Initial site valuation or cost.
- The “build cost” from start to finish.
- Gross Development Value (GDV) – this is the expected sales value or revenue of your project.