Development finance advice in the heart of Exeter

Fox Davidson are an award-winning property development finance broker in Exeter, South Devon, close to Barnfield Theatre, Princesshay Shopping Centre and Exeter Cathedral. We provide financial advice for structured finance on development sites across Devon, Cornwall and the South West.

For over 15 years, we have worked with SME housebuilders, advising our clients on their funding options, and putting together development finance packages consisting of senior debt, mezzanine finance and equity. 

We specialise in property development finance loans of £300,000 typically up to £200 million.

This information on this page covers everything from lenders’ criteria to how to structure deals to allow you to put in the minimum amount of cash on day one.  This is for both first-time developers and seasoned developers who may be looking at alternate funding sources.

Why Fox Davidson?

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  • We specialise in property development finance and have done for over 15 years. We are local so we have relationships with niche lenders throughout Exeter, Devon, and the South West, and we can recommend good building contractors, architects, and other professionals. We know how to position funding and which lenders to approach for each scheme.  
  • We visit sites in-person with you and the funding partner – we want to build a relationship with you, not sit behind a desk.  
  • One of the areas we can help you with is compiling convincing cases for lending. We have pre-formatted development appraisal templates which are accepted by all lenders. We have a good reputation amongst funders for only putting forward cases that are well-packaged and meet the lender’s criteria – we don’t blanket funders with the same lending proposal.   
  • We will liaise with your builder, architects, and other professionals to ensure an efficient process from first drawdown to the last release of funds. 
  • We are proactive in providing solutions to any problems that may arise including extra funding requirements, term extensions and development exit finance or long-term finance options for clients that retain units. 
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Application checklist

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  • Development finance appraisal
  • Link to the planning for the site
  • GDV comparables from one or more agents
  • Development CV showcasing previous projects
  • Property assets and liabilities statement
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Development finance criteria

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With over 100 lenders on our books, lending terms will vary. For the best development finance terms, lending should be at 60% of GDV gross. However, pushing the boundaries is sometimes more attractive as it means that multiple sites can be developed.

Fox Davidson funds schemes vary in size and type, from one unit to several hundred. As well as standard residential schemes we also secure funding for student accommodation, retirement villages and commercial projects. We can fund projects in the UK and Europe.

Typical criteria for Exeter property development funding:

  • 90% of total costs (land, build, professional fees) and up to 75% of GDV.
  • Mezzanine finance and equity solutions can increase the loan-to-cost even further and joint venture funding for 100% of costs can be facilitated for experienced developers or contractors
  • First-time developers 
  • Loans from £300,000 to £200 million
  • Interest roll-up, repaid on sale or refinance 
  • Rates from 4% over Bank of England Base rate/SONIA 
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Build-to-rent development finance

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The best possible finance terms are reserved for clients who build to rent. We can tailor funding solutions with blended rates across the initial development finance and subsequent long term investment finance.  

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100% development finance

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It is possible for experienced developers that have sites in planning and need joint venture funding to secure 100% development finance. The scheme also works for contractors who have previously built for developers and now wish to build for themselves. Joint venture funding is not for first-time developers.

Another way we have successfully secured finance for clients without them putting in much of their own money is through deferred land, payments to a landowner, joint venture with landowners and debt/equity packages.

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Development finance for high-value single units

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Development finance for high-value single units is one of the areas that many lenders will not fund as there is a restricted market. Most funders are comfortable lending development finance in Exeter, Devon, Cornwall, Dorset, and the South West for multiple unit schemes that have unit sale prices that are average for the area.

For bespoke high-value single units of £2.5m plus, we partner with several private funders who lend development finance in the South West for high-value single units.

Fox Davidson will work with you to put together a sound case for lending, this will include GDV appraisals from several local agents and we will ask them to comment on-demand. We will look at the market for the completed units and will work to ensure the funder is comfortable that the planned exit is sound.

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Small development finance

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Small development finance is available to developers who wish to build single units or more. Lending is available from £300,000 upwards. Small development finance is available from niche local lenders in Exeter and across the South West.

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Development finance for first-time developers

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Fox Davidson work with first-time developers – all developers start somewhere. We offer friendly advice and can refer first-time developers to useful contacts such as land agents, architects and builders. Funding for first-time developers is available but, in most instances, you’ll need to employ an experienced architect and building contractor.

As a first-time developer, your net asset position and cash available to go onto the project on day one are important. Lenders will want to see between 10% and 20% of total costs cash input and net property assets to cover anywhere from 10% to 20% of the loan amount.

Lenders will take security in the form of a debenture over the SPV limited company, an unsecured personal guarantee which may be a percentage of the loan amount or just cover cost overruns. The lender will also require a first charge on the development site.

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Personal guarantees

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Most lenders require personal guarantees. Developers who do not wish to provide them will need to keep lending around 50% to 55% of GDV gross.

Personal guarantees for development finance can range from 25% of the loan amount to covering cost overruns and may be limited or unlimited. They are usually unsecured.

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Planning

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Various types, outline, detailed, pre-app and permitted development.

Lenders require a site to have full detailed planning in order for you to draw down funds. Fox Davidson can secure bridging finance on land without planning. Development finance requires full planning consent. For sites without planning, we recommend agreeing on a conditional exchange with completion on receipt of full planning.

Commercial to residential permitted development planning is acceptable to lenders.

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Barn conversion development finance

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Barns can now receive Class Q permitted development rights. Lenders will lend if a site has Class Q PD planning in place. Barn conversions are more complex than ground-up new builds and lenders will look to the developer for previous experience or where there is none the contractor will need to be experienced at completing barn conversions.

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Property refurbishment finance

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Lenders will price property refurbishment finance by the cost and type of work you intend to carry out.

As a rule, property refurbishment loans require a 25% deposit with the funder providing 75% (gross including rolled-up interest and fees) and 100% of the cost of works, subject to approx. 70% of the GDV.

Property refurbishment finance is useful for PD conversions, HMO refurbishments and auction property purchases. Funding can be arranged within a few weeks.

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Development finance for overseas clients

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Funding is available to UK limited companies, but the directors and shareholders do not have to be resident or UK domiciled.  

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Development finance is not all about rate

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Development finance is not all about achieving the best rate of interest. There are more factors at play that should be held with equal or more regard.

  • How well funded is your lender?

During the lockdown of 2020, several lenders stopped lending altogether. Peer-to-peer lenders that have become household names amongst seasoned developers stopped lending overnight. But not only peer-to-peer lenders, several high street banks such as NatWest and Metro bank stopped lending. One of the most important factors you should be considering is: how well funded is your lender? Where are they securing finance form, are you going to have issues securing drawdowns from them? As a developer, you are relying on a lender to lend you funds for typically 12-24 months. If a lender runs out of funds, or their funding line is pulled, you will be left likely having to mothball your site whilst you organise new funding, all of which will eat into profits, possibly making the scheme unprofitable. We have seen this happen.

  • Who are you dealing with?

It’s all very well securing cheap finance, but who are you dealing with at the bank, how experienced are they in property development, what influence or flexibility can they exercise should you need to change the loan you require or want an extension? How involved are they? Maybe they’re too involved! Are they smart enough to help you secure the funding or will they close shop if you say the wrong thing?  We work with lenders that insist on monthly QS visits, as well as lenders that don’t do valuations or site visits at all. Selecting the right lender and the right people working at those lenders is key to forming a good relationship between funder and developer.

  • Other factors

If a lender takes two weeks to release a drawdown, can you cope with waiting to pay your contractors? How flexible is your lender, should you wish to extend or amend the facility? Does your lender accept soft equity through planning gain or deferred land payments to the vendor? Some lenders do not roll-up interest but instead, ask you to service the loan monthly. There are many moving parts to development finance, and at Fox Davidson, we are experienced enough to understand all of them and to look after our clients’ interests.

Fox Davidson are instructed by our clients to secure the best terms for them. All that we do every day is development finance. We strike up relationships with new entrants to market almost daily, and keep up-to-date with over 100 funders changing criteria and appetite, dismissing lenders that don’t do what they promise, have hidden charges, or are impossible to deal with. By outsourcing the sourcing of your property development finance in Exeter, Devon, Cornwall, Dorset, and across the South West, Fox Davidson will save you time, money, and stress, leaving you to deliver quality developments.

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Fox Davidson are an award-winning development finance broker in Exeter.

We can help you finance a commercial development in Torquay, barn conversion in Dartmoor, residential mortgage in Newton Abbot, property refurbishment in Exmouth, and more.

For funding on development sites in Exeter or anywhere in Devon, Dorset, Somerset, Cornwall, or the South West, please speak to one of the team on 01392 243 031 or email enquiry@foxdavidson.co.uk.