Residential Property Development Finance FAQs

• Which type of property developments do you finance?
• How much can I borrow?
• Can you lend to property developers affected by the property crash/credit crunch and have CCJs, arrears, repossession or bankruptcy?
• Do you only lend to experienced developers?
• Is planning permission required?
• What is a Joint Venture (JV) development - and do you lend on these?
• Can't I borrow more cheaply by increasing my mortgage?
• I had a valuation carried out recently - can you use this valuation report?
• How fast can property development finance be arranged?
• What is your application process?

Which type of property developments do you finance?

We finance all types of property developments:

Residential - new build, renovation and conversion. Houses, bungalows, flats/apartments

Commercial - new build - hotels, pubs, restaurants, nursing residential care homes, child nurseries, schools, professional practices, offices, retail parks, golf courses, mixed use schemes - and more.

How much can I borrow?

There are no hard and fast "loan to values" with property development finance. We do have general guidelines, but each development will be assessed on its merits, such as:

1. The type of development (e.g. residential, commercial, houses, flats etc);
2. The location of the development (prime locations can obtain higher levels of funding);
3. How profitable it is (the more profitable, the higher the possible loan);
4. Your experience as a property developer

In summary, it all depends upon the perceived risk - and how much of this you and the lender will take with your relevant financial stake in the project.

100% property development finance is still possible for good quality schemes. To get an idea of the level of funding available for your development, have a look at our product terms & criteria page - or contact us with details of your development.

Can you lend to property developers affected by the property crash/credit crunch and have CCJs, arrears, repossession or bankruptcy?

This is a common question recently, and we're pleased to say yes, we can usually help. Property development finance is usually agreed on a non-status basis. We lend against the value and profitability of the development. We can lend to those whose bankruptcy has been discharged, although not where the bankruptcy is undischarged.

Do you only lend to experienced developers?

Lenders always look to reduce risk; one way of doing this is lending to experienced developers who have proved they can complete a development on time and within budget. However, we can arrange finance for those who can demonstrate these skills plus relevant experience, such as architects, quantity surveyors, estate agents, building contractors or project managers.

If you have no relevant experience it is challenging to obtain funding in the current climate, however, if you have a substantial deposit (equal to 40% of total costs) and a strong professional team behind you, please contact us to discuss your requirements.

Is planning permission required?

No - we can finance all types of scheme:

Outline Planning Permission / Detailed Planning Permission: These property developments can be financed on our usual terms.

Pre-Planning / Planning Gain Finance: We arrange finance for experienced property investors/developers looking to improve/maximise the potential of a site, provided it is zoned for the proposed use and conforms with planning policy guidelines.

What is a Joint Venture (JV) development - and do you lend on these?

A Joint Venture development is one where the property developer shares the financial risk (equity) and profits with a third party. This may be the existing land owner or another lender, mezzanine or equity partner who invests in the development for a share of the profits.

If you have arranged a JV with the land owner or an equity partner, we can provide the development finance. Alternatively, if you require a mezzanine or equity partner, we may be able to help - contact us with details of your development proposal.

Can't I borrow more cheaply by increasing my mortgage?

Good question! And as such it deserves a good (and detailed) response. Having been a fully qualified Independent Financial Adviser and Mortgage Adviser, regulated by the FSA for 17 years - and a specialist business and property finance adviser for the last 8 years - I speak from considerable practical experience.

First and foremost, bear in mind that a property development is a business project, which can take up to 2 years from planning, construction and marketing, until the properties are sold and you receive the proceeds. Many things can happen during this time to affect these profits. Without wishing to spread doom and gloom, I have unfortunately witnessed many property developers suffer financial hardship since the credit crunch of 2008.

So I would have to answer your question with this question: "Do you want to put your (family's) home, savings and other assets at risk throughout this process?"  Your residential mortgage was for the purchase/improvement of your main residence - it is not designed to be used for business finance. Property Development Finance is a product designed for the purpose and has three important advantages over a residential mortgage:

1. You will not put your (family's) home at risk. The loan is secured against the development;

2. You need not put your other assets at risk. You can create a "special purpose vehicle" (SPV) to raise the finance and carry out the development through this limited company. If the development fails, your assets are safe due to the financial protection offered by limited company legislation;

3. The construction loan is released in stages, and as interest is only charged on the balance outstanding, this could work out cheaper than a further advance or remortgage of your home where interest is charged on the whole loan which is released from outset.

I had a valuation carried out recently - can you use this valuation report?

Possibly, provided that it is a full development valuation and appraisal carried out by a reputed chartered valuer. Most property development lenders use a strict list or panel of approved valuers, so would need your valuer to be on their panel. Others can use any firm of valuers, subject to certain criteria. We may require specific information which is not in the original valuation report, so your valuer may charge a fee to retype his report.

How fast can property development finance be arranged?

From the moment you contact us with details of your proposed development, we aim to get you an agreement in principle within 24 hours. For further details of our application process, see below.

What is your application process?

We can usually prepare an agreement in principle with illustrative terms within 24 hours of initial enquiry. This will outline the requirements for a formal offer to be produced, such as professional valuation report, Quantity Surveyor report, sight of scheme drawings and planning consents, detailed financial appraisal and cashflow forecast (which we can prepare for you), and details of your professional team. We may also need to carry out a site visit with you. When we have all these details, a formal offer can be prepared and then it is down to your solicitor to complete the legal formalities. The whole process can take from 2 - 8 weeks.