£1.3m for housebuilders to construct second phase of 50+ housing estate
The client: An SPV limited company representing a property developer, a building contractor and a plant hire company, all with considerable experience in the construction industry.
The project: The second phase of a planned development on the edge of a Fenland town, originally planned to provide 51 new homes of varying size and type. This phase of the project would see the construction of 15 houses, mostly two-bedroom starter homes and some larger, four bedroom townhouses.
The development involved very low build costs of just £65 per square foot, but quite an investment in infrastructure – roads and utilities.
The finance: At the outset, the clients planned for the entire project to be funded using three separate finance facilities. Read about the first phase of development finance here.
In order to secure funding for the second phase, we returned to the existing lender which agreed another facility subject to the clients reducing the first phase balance to £250,000. Our clients were able to do this by selling some of the homes that had already been built, and repaid £1m.
With the lender satisfied, the new finance offer included both increased capital and a reduced interest rate compared to the initial phase of development. As in phase one, development funds will be released in stages as work progresses, with monitoring and certification provided by an appointed quantity surveyor.