Property Development Finance.
Using a broker will ensure you secure the most competitive terms for your next development. The terms we secure will depend on your drivers, perhaps you need low gearing and market leading rates or prefer to gear up the lending thus allowing you to develop multiple sites at any one time.
Fox Davidson’s management team specialise in development finance. 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 single unit renovations to multiple property new build sites..
There are various levels of development finance and allocating the right lender will depend on the type of project and the experience of the developer.
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 than the client completing the works themselves.
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 Property Development Finance:
New build developments from the ground up can be funded using senior debt and mezzanine finance. Up to 95% of total costs is possible.
The applicant will need to be an experienced developer working with established contractors and architects.
Property Development Finance – Typical Terms:
- Finance of up to 75% of Gross Development Value
- Up to 95% of total costs including land purchase, all professional fees, stamp duty and build costs
- Term: 3 Months to 24 Months
- Amount: £100,000 to £25 Million plus, larger amounts by negotiation.
- Funds released in stages, subject to sign off from QS.
- 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
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
- 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.
Speak direct with one of the Fox Directors who deal exlcuively with property development finance. You can email [email protected] or call 01179897950 and ask to speak with Wesley or Sarah.
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 or buy to let finance.
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.