Following the long break we have plenty of news to share with you...
If we are to believe the media and some commentators, the coming months are going to prove difficult for the residential property market. A lack of mortgage availability is still a serious stumbling block despite continuing low interest rates. Another cloud on the horizon for both developers and house buyers is the new rules governing banks' capital requirements. The greater amount of capital the banks have to hold, the less they can lend. This could be another blow to developers and property entrepreneurs who are already being squeezed by the banks.
SPECIALIST LENDERS
The private, non bank lenders are largely unaffected by capital requirements and they have stepped in to the shoes of the high street banks who have virtually stopped lending to small property developers. These specialist lenders have a far greater understanding of development than the average bank. For this reason alone they can be recommended. They also have quick decision making processes which is refreshing given the months that many deals now take to complete through the big banks. Interest rates typically start at 1% per month and most funders are willing to lend up to 50% of Gross Development Value.
One small bank has made a promising debut, lending to SME developers. Of particular benefit is that they allow the developer to provide their contribution to building costs "on the drip". They lend 60% of land and 60% of building costs provided you can show that you have future cash flows that will be sufficient to make your 40% contribution to the building costs. The effect of this is to give you a higher LTV on the land loan.
We have a number of such lenders through whom we can source development finance, and we would be pleased to introduce your scheme to them.
SOLICITORS
It is tough enough to achieve a development finance loan offer these days but the pain can be further exacerbated by long delays in completing development loans. At CD Property Finance we have experienced this on a number of occasions. A period of 6 months to complete a loan is unusual but not unheard of.
One of the main causes of delay can be the lack of experience of the borrower's solicitor. It is imperative that any serious developer should instruct a lawyer who has considerable experience of the complexities of development funding. For this reason, unless your solicitor is highly competent in all aspects of property transactions we recommend that you seek the advice of CD Property Finance on who should act for you. We may well suggest using one of the lending bank's panel solicitors since they will be fully conversant with the lender's requirements. We can assure you that this will go a long way to avoid you losing the development opportunity and can in the long run save on legal costs.
Please feel free to discuss this with us.
PROPERTY INSURANCE, INCLUDING CONTRACTORS' ALL RISKS COVER
All property lenders insist on Contractors' All Risks cover for your project in addition to your compulsory insurances If you do not already have adequate insurance then, again, this can be the cause of long delays in loan completions.
CD Property Finance is happy to help you with all your general insurance requirements through our close relationship with one of the country's leading insurance brokers. Our experience is that they provide an excellent service and can place the most difficult risks, for example, where a project has already been started but no insurance is held.
LTD COMPANY BUY TO LET
We can arrange Ltd Company Buy to Let finance for both houses and flats. Maximum LTV is 75% for houses and 50% for flats. Rates start at 4.24% per annum.
Please contact us for more details.
Email: Chris@cdpropertyfinance.com
