The Clients: Three brothers who served as directors for their family-run Trading Limited Company. The company operated as a building service contractor, and also had a strong portfolio of property developments of its own.
The Development: A plot of land with planning permission granted for one residential dwelling in the West of England. Our clients intended to sell the property upon completion and use the profits for further investments.
The Finance: While our clients had all the funds necessary to purchase the land outright, they required development finance for 100% of the build costs.
The Challenge: Our clients first approached us at the height of the pandemic, when a significant number of lenders had entirely withdrawn from the development finance space. Consequently, the development finance still available was priced less competitively than before the pandemic.
Our second challenge was that our clients didn’t need a considerable amount of finance, just £130,000. Most development finance lenders have a minimum debt requirement of around £500,000 to ensure deals are financially viable for them. Therefore, the selection of available lenders for this case was even smaller!
The Solution: This case required all our knowledge of the development finance sector. We put together a proposal featuring our clients’ development portfolio and examples of their extensive experience in the industry to use as evidence when approaching potential lenders.
Having established which lenders were still in the development finance market, we were able to call upon our industry relationships to discuss the proposition with them directly. After a few discussions, we were able to secure a specialist lender that had a low enough minimum debt requirement, and that was comfortable lending to our clients based on their expertise in the sector. We were able to secure a very competitive rate and worked closely with the lender and our clients’ solicitors to complete the case promptly, despite delays due to the pandemic. Here are the details:
Gross Development Value: £325,000
Loan amount: £130,000
Rate: 1.25% fixed per month
Term: 12months (interest rolled up)
Lender arrangement fee: 2% (£2,600) deducted from the advance
Application: Trading Limited Company
Consultant: Robin Tait, 01625 416391
18th November 2020