Property Development Finance

Property development is a complex, and potentially risky business, especially if you are new to the business. Even more so, in the current economic climate. You need to consider a wide range of related matters need to be considered;

  • Access to the land.
  • Is there already planning? If so, is it what you need for your project?
  • How good is the availability of services to the site?
  • Are there any special geological considerations?
  • Is there local opposition to the project?

Then you have the thorny question of finding a suitable Lender to provide the finance. Again this is far from easy, especially if you are new to the business.

How do I know what is the best finance deal?

Our job at Business Finance Services Ltd is to step in and take as much stress & strain off you, the Developer, as possible. Our job is to find the Lender(s) most suitable as a partner in the development of your property. The good news is that, if you know where to look, there are now more lenders in the property development and Bridging markets than there ever were. Thus, in many cases, such as the one cited here, we will have Lenders prepared to go where the big Banks fear to tread!

Case Study –  BFS can take you where the big Banks fear to tread!

Our client had built up a portfolio of properties through a process of refurbishments over a number of years. He now decided that it was time to move on to full blown, ground up, property development. He identified a plot of land with planning for a three apartment block. His problem was that, as this was his first attempt. He had no track record and his own Bank, and a couple of others, turned him down. It was at this stage that he approached BFS for help.

By the time he approached us he had already acquired the land (with planning) and had started building. The problem was that he was doing this from his own income. Inevitably, progress had become very slow. He needed to find a source of sufficient finance to complete the build in a reasonable timeframe.

The solution to his funding problem

After reviewing our client’s plans and what he needed, we were able to locate a specialist lender. One who was prepared to put up the finance he needed secured against the land and our clients PG. In this instance the funding source was a Crowd Funding Platform.

On successfull completion we arranged a Buy-to-Let mortgage for him. This provided sufficient income to pay off the original Loan and, at the same time, provided him with sufficient extra funds to provide a deposit on his next project. Using our contacts we then arranged the next tranche of finance with another specialist Lender. This enabled our client to start work on building a block of 14 apartments.

 In property development time is often of the essence. So, knowing who to approach for property development finance, and getting a quick decision are most important elements. If you need help in raising property development finance quickly, then give us a call at BFS.

Bridging loan finance

Bridging finance is a concept that has been well established and readily available for many years. If you have a very solid balance sheet and a strong case for funding then the Main Banks will usually be interested. If, however, you have a less sound case things become more ‘difficult’. Your only option may be to approach one of the ‘specialist’ Lenders, of whom there are a fair number. The problem is then to determine who offers you the best deal?

On the other hand, one advantage is that their decision making process tends to be very quick.

Another is that some of them will look at high risk cases which normal Lenders would not touch.

The disadvantage is that their rates tend to be very high (typically as much as 1.5%/month). Also, there are often heavy penalties should the bridging requirement run over the agreed time limit (not unknown with development projects).

How do I find sources of Development Finance 

Development finance isn’t as difficult to obtain as you might think. The Directors of BFS have backgrounds in commercial lending and in running small businesses so they have an understanding of the problems involved. They fully comprehend the challenges which businesses face, so they’re in a strong position to provide the right financial advice and support. If you want to talk to us about the services which we offer, whether that be arrangement of a development loan or Bridging finance to cover a funding gap, call us. We’ll listen to what you need, and offer advice based on your individual circumstances.

Call us on 0800 093 5240 to have a free, no-strings consultation with one of our team, or email at: . We’re here to help!


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Recovery Loan Scheme