Property Development Finance
Fox Davidson fund all property asset classes (residential and commercial) in the UK. We secure development finance from £500,000 and typically up to £100 Million.
Using JV partners we can fund up to 100% of all costs including purchase, build and professional fees.
How Does Development Finance Work?
Development finance works with a lender making an initial loan based on the purchase price. The lender will subsequently fund 100% of the cost of works. This ensures that the development finance lender can ensure the works are completed and the development is finished, ready to be sold or refinanced.
Types of Development Finance
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
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
What Paperwork Is Required 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.