Nearly three months on from the start of the year and the banks have agreed to implement Project Merlin, the initiative to lend more to small businesses. It is hard to see how this will help beleaguered property developers, however. The major banks still have enormous numbers of problem property loans and it looks like another couple of years before they will show any appetite to lend to the smaller developer, most of whom require much higher gearing (Lending to Cost/GDV) than is on offer from the major banks. There are some new lenders that are making an impact and these are discussed below.
Investors are in a better situation. Portfolio finance is available from a number of good lenders provided there is strong interest cover. Typically up to 65%
New Lenders - Up to £500,000
Small developers carrying out schemes where the borrowing requirement is under £500,000 have suffered from a lack of interest from banks in recent years. This is slowly being addressed and CD Property Finance is helping developers with projects for new build houses, barn conversions and renovation projects.
Housing schemes preferred but flats considered
Arrangements fees from 2%, including CD Property Finance fee
Interest rates from 7% per annum
Exit fees likely to apply
New Lenders - Over £500,000
For schemes with a borrowing requirement of up to about £5m CD Property Finance can source finance from its usual lenders but also from new funders. The terms below will vary considerably depending on the developers' experience, the nature of the project and particularly the gearing.
Housing schemes preferred, but flats considered
Arrangement fees from 2%, including CD Property Finance fee
Interest rates from 4% over base rate
Exit fees likely to apply
Property Insurance
Don't forget to contact us if your renewal is due or if you have a new investment or development that needs to be insured. We can help even if the finance is not arranged through us!
If you would like more information please call or email us chris@cdpropertyfinance.com
Best wishes
Chris Dowdeswell
01428 684452
