Each and every case we encounter is completely unique, and our property development finance cases are often particularly challenging. This is a specialist type of finance, and it’s vital to have an expert on board to navigate the options on the market which best fit your requirements.
Our client was buying a Grade II listed property for £1.5m and had exchanged contracts on the purchase, with a long date set for completion. With the purchase progressing, the client applied for planning permission to convert the property into high quality co-living accommodation, comprising several rooms, studios and bedsit units. The building would also provide shared facilities such as a common room with dining, laundry, gym, cinema and library.
Our client was looking to borrow up to 70% net of the purchase price and 100% of the build costs, estimated at £1.65m. Meanwhile, the gross development value (GDV) was estimated at £8.2m, but most development finance lenders would only offer a maximum of up to 60% LTV gross against the purchase price.
Since exchanging contracts on the purchase and being granted planning permission, the property had gained significant value. Our Associate Director Caroline Burke sourced a lender and presented evidence of this increase, which the bank was able to accept. This allowed the client to borrow a total of £3.1m – the initial sum they needed to complete on the purchase, as well as the funds needed to develop the site. The loan was based on a term of 18 months, allowing time for the units to be developed and the selling process to begin, at which point the investment will begin to be recouped and the finance will be repaid.
If you are looking for property development finance, you need a team to help advise you on the range of options on the market. Get in touch with us for a free and confidential assessment of your situation.