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Raising £934k to build flats next to railway

The client: We were approached by a broker who was looking to secure development finance for his client, a businessman who owns three wine bars. 

Property development experience: In addition to operating the wine bars, the client has more than 10 years' experience of building residential properties, mostly in and around the London area.

Background: In 2011, the client and his father purchased a plot of land in London which abutted a railway line. At this time, the availability of property development finance was limited, so whilst waiting for the market to pick up they successfully sought planning permission to build a block of eight flats. After this, the client's father retired, transferring the balance of his interest in the land to his son by Deed of Gift.

The project: To build a block of eight flats made up of three one-bed flats, four two-bed flats and a single studio. Once complete the flats would be let on individual Assured Shorthold Tenancy agreements. The predicted development completion time is 18 months. 

The challenge: To find a lender willing to finance the project in such close proximity to a railway line and, although none was found on site, Japanese Knotweed was identified nearby. There was also some concern about the site’s previous use as a filling station, which could have resulted in ground contamination.

The result: We took the case to one of the challenger banks. The valuation report found the site to be an ideal location for a residential development. It also confirmed that the knotweed posed no immediate threat, and the client had already obtained a specialist report confirming the land to be free from contamination from its previous use.With all concerns addressed, the bank offered terms.

We were also able to help the client obtain a further advance when the price of the development contract rose just two months into the build. After construction was completed, we helped the client once again, as he refinanced onto a term product and began letting the properties.

The terms of the initial finance were as follows:

Property Details

Land purchase price: £600,000

Build costs: £650,000

GDV: £1,750,000

Loan amount: £934,000

LTV: 53% of GDV

Estimated completion date: Summer 2015

If you are looking for development finance, please call our deal placement team direct on 0345 148 9238.


See how we have helped the developer with this deal:

Developer receives further advance on new build flats

Property developer remortgages new build block of flats onto £1.6m+ buy to let mortgage


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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.