Property Development Finance.
Fox Davidson are an award winning property development finance broker. Each year we secure millions of pounds in property development finance on property in the UK. Our excellent relationship with development finance lenders allow us to negotiate the best possible terms for our clients.
We have access to the whole of the market and have funded all types of developments from single unit renovations to multiple-units ground up developments.
There are various levels of property development finance and allocating the right lender will depend on the type of project and the experience of the developer.
Light & Heavy Refurbishment Finance.
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.
Heavy refurbishment projects will require that the applicant has experience of completing previous projects. The lender may also insist that a building contractor is used to carry out the works.
Refurbishment Finance 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 90% of total costs is possible.
The applicant will need to be an experienced developer working with an established design and build team.
- Finance of up to 75% of Gross Development Value
- Up to 80% of total costs including land purchase, all professional fees, stamp duty and including 100% of build costs
- Term: 3 Months to 24 Months
- Amount: £500,000 with no upward limit
- 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%
- 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
What paperwork do you need for development finance?
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.