Property Development Finance
Property Development Finance is for the development, redevelopment or refurbishment of residential, commercial or semi-commercial property.
Typically UK property development finance will be used for
- Land Purchase
- Small and large new build projects
- Commercial and residential
- Conversion projects
- Property refurbishment projects
The Aftersales Network is pleased to inform you that whilst a number of the high street banks appetite is currently restricted lending on property development, we have access to a number of lenders that will consider proposals for both brownfield and greenfield sites, and on both a speculative and pre-sold / pre-let basis.
As with other commercial loans, property development loans will be secured against the land and property you wish to develop. Additional security such as directors guarantees and debentures may also be required.
For the experienced developer(s) we would always seek a property development loan through a main stream lender, wherever possible, due to the lower overall cost.
In order to qualify for this type of lending, you must have experience; employment of a project manager can be discounted as experience in certain circumstances.
In addition, your background income stream should be stable and sufficient to fund your living.
This would need to be evidenced by way of a Statement of Assets Liabilities, Income and Expenditure Report (SALIE) and proven by accounts or employed payslips.
Typically, loans are available over a twelve month period in order to fund the land/building acquisition and the development costs.
The loan is split onto two parts; up to 65% of the undeveloped “site” acquisition and 65% of the build costs, drawn down in stages.
The build costs can include, architects and other professional fee’s, your wages / drawings if you need them, a 20% contingency to cover cost / time overruns, and the interest payments on both loans rolled into the total facility.
The total potential loan should not exceed 60% of the developed value of the project. In effect, these loans take the form of a secured bridging facility, they are not “ term loans”, and are not assessed as such, unless your exit strategy is to retain the developed building, for say letting purposes. The lender needs to know your exit strategy at outset.
Whilst funding is further restricted for the inexperienced developer(s), a limited number of funding options are available. The overall cost however is likely to be considerably higher to reflect the risks involved.
The Aftersales Network has an extensive range of property development solutions.
Please contact us and we will be happy to discuss your specific requirements and options in more detail