Development Finance Types
UK Property Finance can secure funding for the purchase and development of land and/or property.
Development Funding is defined by the following specific sectors:
Residential property development
This is the development of houses or flats from a brown or greenfield site but can also be the conversion of a standing house into flats or even flats converted back into a house. Development on this basis is normally completed on a commercial basis and is generally not for owner occupation.
This type of finance is provided when the client wants to extend or improve the property for whatever reason but cannot get the finance required from their current bank or building society. Adevelopment loan uses the value of the property as security and therefore is not usually based on the individual’s monthly affordability.
Commercial and semi-commercial property developments
This area includes any type of commercial units such as offices, shops, factories etc. or semi commercial units such as shops with flats above.
Finance can be raised on commercial or semi commercial premises for a multitude of short term reasons i.e. to purchase stock, short term cash flow problems, tax reasons etc. It is important to remember that any commercial borrowing is based on the bricks and mortar value of the security i.e. the value of the building and/or land. Any “good will” is NOT included in the valuation. This is because the value to the lender is based on the security with vacant possession not on the business as a going concern.
Self-build finance projects
This finance is usually arranged on a personal basis and for individuals who are looking to build a property from ground up, where they intend to live themselves. It is often arranged on a mortgage basis and as this is FCA regulated, standard rules of affordability usually prevail in line with those of a normal regulated residential mortgage.
Property renovation (including barn conversion)/refurbishment
This is where properties require full renovations and can quite often be derelict buildings such as barns consisting of 4 walls but without windows, doors, roof or utilities etc. If the projected is being completed for owner occupation, then it will be FCA regulated. If the renovation is to be sold after completion, then the project is not FCA regulated.
Regulated by Financial Conduct Authority.
UK Property Finance are an FCA regulated brokerage and as such can raise finance on any development projects so whether it is a new build development being undertaken (single or multiple units) or refurbishing an existing residential or commercial property, we work with our clients through the whole project. This commences with an initial site visit and inspection, preparation of lender documentation, obtaining of lender approval and continual help and support (as required) to ensure the project stays on track and that funds are released when needed. If the exit strategy is via refinance, then our service can culminate in helping to arrange the long term finance needed to repay the development finance.
When considering whether or not to fund, we will consider many important issues, such as:
Overall funding levels – having sufficient funds to complete the whole project including contingencies are vital.
Timing of drawdowns – the staged drawdown of funds to compliment your cash flow ensures a stress free and profitable project.
Cost – obviously a key issue but only after the above points have been confirmed. Trying to save a small percentage on initial costs can lead to problems if the actual deal is not right.
Feasibility of the project – the end result of the project should demonstrate a good profit.