Property Development Finance

Master Broker of Development Finance in Bristol & Bath. We Secure Market Leading Finance Terms for Property Developers. Development Finance For Renovations, Self-Build and New Build Developments. Finance Possible For Land With or Without Planning. Loans From £100,000 to £25 Million plus.

Naples, Italy

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Property Development Finance

In the UK it is no secret that there is a vast shortage of property. It, therefore, comes as no surprise that developing property can be a lucrative business and more and more people are buying and renovating the property for profit.

Tying your own cash up in a project can be restrictive and with rates, at record lows, property development finance is an attractive proposition.

Fox Davidson’s specialist team of commercial mortgage brokers have been negotiating market leading terms for first time developers through to small house builders since 2005. We understand the issues you will have as a developer and will work on your behalf to secure the best possible terms to ensure your development project remains as profitable as possible.

Fox Davidson are leading property development finance brokers in Bristol & Bath. We have local knowledge of the Bristol & Bath property market and have built up unrivalled lender relationships in the local area.

We have access to the whole of the market and have funded all types of projects from new build development site for small house builders to renovation projects on single units.

There are various types of development finance and allocating the right lender will depend on the type of project and the experience of the client. We have summarised the 3 main categories of property development.

Renovation Projects.

Renovation projects typically fall into 2 categories:

  • Light Refurbishment – Decoration, New Bathroom & Kitchen. Short term loan up to 6 months.No planning needed.
  • Heavy Refurbishment – Works that require planning e.g. Adding Bedrooms, Property Extensions. Loan Term up to 18 months.

The mortgage lender will be looking to take the 1st charge on the property. For light refurbishment, the applicant should have some experience of owning property but not necessarily have completed a refurbishment previously. The lender may insist that contractors are used rather completing the works personally.

Heavy refurbishment projects will require that the applicant has experience of completing previous projects.

Typical Renovation Terms:

  • 0.5% to 1.2% per month depending on the experience of the applicant, the loan to value and the type of work being undertaken
  • 75% loan to value on day 1, one tranche of funds released
  • Lenders fee typically 1.5% – 2%. No Exit Fee.
  • Survey and legal costs will apply

New Build Developments:

New build developments from the ground up can be funded from completion at lower loan to values and then up to 100% of build costs and all professional fees can be funded subject to a maximum loan to value of the final gross development value (GDV).

The applicant will need to be experienced developer and have a solid team of contractors in place to complete the work.

Property Development Finance – Typical Terms:

  • Stretched Senior Debt of up to 75% of Gross Development Value
  • 100% of Build Costs
  • Term: 3 Months to 24 Months
  • Amount: £100,000 to £10 Million plus, larger amounts by negotiation.
  • Funds released in stages, subject to sign off from architect or bank surveyor
  • Planning is generally needed although bridging finance terms are possible for land without planning.
  • Rates from Bank base rate plus 3.5%

Property Development Finance – The Fees:

  • Arrangement fee – 1% to 2%
  • Exit Fee – Nil to 2 % of loan amount or GDV
  • Broker Fee – Where possible we will waive our fees but we may charge up to 1%
  • Valuation Fees – Vary depending on site value. There will be ongoing survey costs as the build progresses

Applicant Documents.

Typically lenders will require the following supporting documents:

  • Application Form
  • CV’s detailing development experience of the applicant
  • Asset & liability / income & expenditure statement
  • Annual accounts/tax returns – if the borrower is a going concern

Construction Documents

    • Valuations and QS reports
    • Summary of proposed scheme including location, current and proposed site use
    • Development appraisal including detailed costings and proposed specification/finish
    • Project timeline/cash-flow forecast (allowing for prelims, construction and realistic sales window)
    • Copy of planning consent and plans including accommodation schedule
    • Comparables for sale and rent from a local agent
    • Proposed team including contractor, QS, architect etc – To include CV’s and financial accounts for these where appropriate, demonstrating ability to deliver the project.

Next Steps.

Call Fox Davidson and ask to speak the property development finance team. We will discuss your project and get a basic understanding of your requirements and offer some initial advice.

Your development finance broker will speak to the right lenders to fund the project and will revert back to you with an outline of terms and next steps. If the terms are agreeable to you will we will set up a meeting between with yourself and the proposed lender.

Post Development.

Some of the property developers we work with will choose to sell the properties to repay the property development finance.

If you prefer to hold on to some or all of the property then Fox Davidson is able to secure exit finance by way of developer exit finance, buy to let finance.

Self-Build Mortgages

Note that development finance for a property you or your family will live in is referred to as self-build mortgage finance and is looked at in more detail here: Self-Build Mortgages.

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