United Trust Bank (UTB) has launched two new development finance products designed specifically to help SME builders and developers.
Aimed at providing a one-stop funding service for developers operating in the Private Rented Sector, the first product is a ‘Build to Let’ finance solution.
The ‘Build to Let’ facility will provide the funds to complete projects on the bank’s usual terms and will give an agreement in principal to provide an investment facility at the end of the build, allowing the developer to reduce their funding costs, recover some equity and move on to their next project with UTB, therefore negating the need to identify a new long-term lender and incur more fees and costs.
Noel Meredith, executive director of United Trust Bank, said:
“Developers on multi-unit projects sometimes decide to retain a small number of the units to create or add to their own buy to let portfolios and retaining one or two of the last units as deferred profit can be a cost effective option.”
“However, more recently we’ve seen some developers taking this approach to the next level and creating entire ‘build to let’ projects where they are literally building their own rental property portfolio at a much lower cost than acquiring existing housing stock.
“They not only get a property portfolio at wholesale prices, but they avoid all of the other associated costs one encounters when buying properties through traditional channels, including valuation and legal fees, and they have just one financial solution for the whole of that group of properties rather than a number of different loans or mortgages arranged if properties are acquired piecemeal.”
The second of UTB’s products new to market this week is its Sales Period Funding solution, which has been designed to enable developers to refinance remaining stock arising from recently completed developments while they are selling the project.
In the main, UTB will be prepared to refinance existing debt and self-funded development costs.
An element of equity release is also available. If the finance is required to release capital to buy another site, the bank may assist with the new scheme as well.
“Our Sales Period Funding solution will help developers in a variety of circumstances”,
added Noel Meredith.
“Developers who wish to give themselves more time in which to achieve sales but have an expensive senior debt or a restrictive term may wish to refinance with us in order to reduce their ongoing costs and maximize their unit sales values.
Our facility may also enable them to release capital in order to progress other projects. We will be happy to discuss refinancing opportunities with developers who have completed or near completed sites.”