Property Development Finance in the UK
As well as providing Buy to Let mortgages and Commercial mortgages, we also specialise in providing residential and commercial property development finance for both residential property finance and commercial property developments across the spectrum, from multi million pound commercial property developments, to residential property developments costing tens of thousands of pounds.
If you are unsure which type of finance best suits your needs read Steve Olejnik (our head of sales) article "Property development or refurbishment finance?" where he looks at the various options available.
Property development finance rates differ depending on the applicant's experience, the industry sector and the nature of the proposal but a good benchmark to consider would be Bank Base Rate + 5% and above. A property development loan is usually arranged on an interest only basis and the term of the loan can be one year plus depending on the size and nature of the underlying project.
Loan to project costs will be influenced by projected gross property development values but funding would typically be in the region of 55% to 65% of the purchase price and build costs.
It is also possible to organise a loan to finance up to 100% of the property development costs where the borrower already owns the land on an unencumbered basis.
Where the property developer is able to improve the planning consent post acquisition, we’re able to negotiate increased levels of funding which recognise higher land and gross development values.
We negotiate finance requirements with a full panel of property development lenders and other financial institutions to provide the right 'match' to the project.
We offer a full range of development finance options at every stage of the development process.
• Senior (bank) debt
Typically, the maximum senior debt finance achievable will be equal to 75% of total costs. However it’s important to consider our ability to re-gear finance against planning gain/enhanced value at the project end, therefore vastly increasing finance potential. In short, we can finance on the increased value of the property post development.
For experienced property developers with a strong track record, 100% of build out costs can be obtained.
We’ve access to providers of mezzanine finance and equity participations that can reduce the amount of development capital that is required to inject into individual property development schemes. Whilst terms will often differ significantly from senior debt finance, this does provide a developer with an opportunity to enhance returns from individual development projects.
Where appropriate long-term property finance can be arranged to provide 'exit' from initial, short-term development finance because we’re also leaders in both the Buy to Let and commercial mortgage markets. We are also in a postion to be able to offer you bridging finance should you require it.
Our skills base is spread across both residential and commercial property development finance. For commercial development schemes we can arrange finance with pre-lets, on pre-sales, or development for owner occupation. Crucially, we provide full assistance with initial residential and commercial property development appraisals, to ensure projects are viable to development lenders.
Typically, commercial and residential property development finance arranged by us for clients range from £250,000 to £25m.
To discuss your property development finance needs please call us or fill in an enquiry form.
Don't forget we can also offer you market leading Buy to Let mortgages, as well as residential mortagages should you be thinking of purchasing a home and commercial mortgages for all your commercial investment mortgage needs.