Location: Clevedon, North Somerset

Loan Amount: £2,350,000

Finance Category: Development Finance

The Story

We were approached by an experienced developer that wished to take out funding at a high loan-to-cost for a new-build scheme of six houses and the conversion of existing barns into three units in Clevedon, North Somerset.

The Challenge

Our client was midway through an existing development scheme and consequently, most of their funds were still tied up in that scheme.

We need to secure lending at the top of most lenders comfort which is typically 90% of costs and up to 70% of GDV. Our client was not prepared to pay eye-watering rates of interest either. We needed competitive lending terms at a high loan to cost.

The Solution

Many of the mainstream development finance lenders top out at 60% to 65% of GDV and like to see around 20% of total costs from the developer. There are a few lenders that can be flexible for the right developer and on the right development. We worked with the client to put together a comprehensive lending proposal, highlighting the scheme’s strengths as well as the developer’s experience. The developer was also the main contractor which helped to give the lender confidence that the scheme could be delivered on time and within budget.

Funding was agreed upon with a reduced cash input from the client whilst still achieving fair pricing on the rate and fees.

Interestingly this scheme was built during the COVID pandemic and yet the site was never mothballed as the developer had a trusted team who were happy and able to continue working throughout the pandemic whilst adhering to COVID restrictions. The site was delivered on time and within budget, and the lender has been impressed with the build. The expected GDV has returned a higher sales process than forecast, too. Our client can go on to build a relationship with the funder for further projects.

Development finance for barn conversions is available to experienced developers. Converting a barn is more complicated than a new build and often barns are listed or in heritage sites which brings further complications. Using a lender familiar with barn conversions is key as understanding the complications and having the solutions to ensure the development is completed on time and to budget are beneficial to all parties.

 

Fox Davidson

Fox Davidson is an award-winning team of property finance consultants. To discuss your property funding requirements, please email enquiry@foxdavidson.co.uk or call us on 0117 989 7950.

Wesley Davidson

Director & Property Finance Consultant

About: Wesley has been in the industry for 20 years and has a wealth of knowledge in all areas of property finance. His real passion is working with property developers on the funding of development sites. His work ethos is to constantly gain more knowledge in order to better himself and offer more to clients and to be contactable at all times, this sets him apart from his peers.

Favourite Film: Last of the Mohicans

Quote: “In complete darkness we are all the same, it is only our knowledge and wisdom that separates us. Don’t let your eyes deceive you.” – Fat Controller