Residential Development Loan
Loan Amount: £1,200,000
Finance Category: Development Finance
Fox Davidson were approached by a Bristol property developer that had secured a site in Dorset.
The site had planning permission to develop six units made up of three affordable houses and three open-market houses.
With offices in Bristol and in Exeter, Fox Davidson are a leading property development finance broker in Dorset and have worked on many schemes and funded hundreds of units over the last 15 years. It is, however, unusual to find such a perfect site as this in Dorset.
The access was fantastic, down an almost private road and on to an open flat field, which just looked like it wasn’t going to cause the developer any issues whatsoever.
The entrance to the site had recently had three new builds on it and so access was purpose-made, ideal for the development of the next part of the site which our clients were purchasing.
Our clients were first-time property developers, and securing development finance for first-time developers requires more packaging of the lending proposal to give the lender confidence in them to deliver the scheme.
Also, their deposit initially only covered around 10% of total costs, which although this is acceptable to some lenders, did mean we were lending right at the highest loan-to-cost and loan-to-GDV.
In the current climate (during the Covid-19 pandemic of 2021), lenders’ appetite is returning to pre-pandemic levels, but there is still a lot of caution and lending levels are mostly still 5% below where they would be in a full housing market.
There are several lenders that will work with first-time property developers, and we approached several of them to ascertain their appetite for lending to our clients and to get a feel for the max loan-to-GDV and cost that they would lend at.
We secured terms with three funders, all of which were different in price and loan amount.
We advised our clients to proceed with a lender that wasn’t necessarily the cheapest, but the most flexible.
They were able to lend above 85% of costs and to 64% of GDV, including interest and fees.
The offset for the lender was an increase in personal guarantee and the requirement for a very experienced South West building contractor with good financials.
Fox Davidson are a specialist property development finance broker in Dorset with offices in Bristol and Exeter. We secure development finance for Dorset property developers. Funding is available from £300,000 and up to £200 million.
For more information on development finance in Dorset, please email email@example.com or call us on 0117 989 7950.