CD Property Finance will provide further details on this scheme when they become available. This is what is known so far.The Chancellor announced that where there are existing building sites that have stalled, a £400m Get Britain Building funding pot will enable small house builders to restart construction, helping to deliver up to 16,000 new homes on sites that already have planning permission, but have been shut down because of economic conditions.
The measure will be supported through the New Homes Bonus, which will ensure that those areas which are growing have the resources to meet the needs of their new residents and existing communities.It is intended that cash will be released by next July to get sites started.
If you would like to discuss this further then please contact Chris at CD Property Finance.
Showing posts with label property development property development finance. Show all posts
Showing posts with label property development property development finance. Show all posts
Monday, 12 December 2011
Wednesday, 23 March 2011
Property Development & Investment Funding Spring Market Report - March 2011
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
Wednesday, 15 December 2010
Property Development Finanace UK Market Report - December 2010
As the end of 2010 approaches it is worth reflecting on the changes we have seen in the funding market this year. The answer is probably "very little"!
The high street banks have hardly any appetite for property lending, especially development finance for new borrowers. At CD Property Finance we continue to see cases where RBS/NatWest have terminated funding on schemes where all logic dictates that they should continue lending to maximise their chances of being repaid. Unfortunately, they are displaying little commonsense and this has resulted in many developers losing all the funds they put into the scheme. Meanwhile, the development is part built and blighted for the foreseeable future.
On a brighter note, we are working with a dozen or so active development lenders plus numerous bridging funders and a handful of good mezzanine funders. This gives a reasonable choice for developers, but it is still hard to satisfy lenders' strict criteria. The smaller lenders have been particularly supportive over the past 12 months. We even managed to secure funding for a small developer in a seaside town to create two flats on top of an existing apartment block, the funder providing a 50%
Blended Senior Debt and Mezzanine Funding
Working with a single bank this is an attractive option for the experienced developer. The bank provides up to 55%
Finally …
In our blogs we try to provide practical advice to our clients. For instance, earlier this year we advised developers to think very carefully which law firm to instruct on their site purchases and funding of the scheme.
In recent months we have noticed that some developers are making direct contact with a number of lenders and instructing more than one broker in regard to their funding requirements for a particular deal. This is understandable in many ways especially with the internet at everyone's disposal. The developer naturally wants to feel he is getting the best deal.
However the market for development finance is small and there are relatively few experienced brokers and willing lenders. This means that it is more often than not counter productive to put the scheme to more than one source at a time since lenders take a dim view if they see the same deal from a number of different sources. They term it as "touting" or "punting" and invariably the fact that a number of parties are looking at the deal raises the suspicion that the proposal is a "difficult" one. From our experience when this happens that deal tends to go to the bottom of the pile, and stay there.
If you would like more information please call or email us chris@cdpropertyfinance.com
Best wishes
01428 684452
Thursday, 21 October 2010
Development Finance Lender Update
Arguably the most serious problem in the market at present is the depressed level of mortgage lending. There are few signs of this improving and, if anything, the shortage could get worse as the FSA considers imposing tighter rules on the lenders that could spell the end of interest only mortgages.
Notwithstanding this, we continue to seek out the best deals for our clients and to locate new funding sources. In this Blog we look at:
- Two new development lenders
- Development Finance in Scotland and the North of England
Bank Finance for Developers
This bank is keen to lend on viable schemes. An exciting feature is that they will allow the developer to "drip" in their contribution to the construction costs provided the bank is happy that future cash flows are likely to be generate sufficient income to fund the developer's share of the construction costs. This means they can in some circumstances lend up to 60% of land value. Their terms are:
- They lend to UK based co's, individuals and partnerships.
- Houses, flats, mixed use - England only.
- Minimum loan £500,000. Maximum loan £3,000,000.
- Interest rate - 8% p.a minimum - can be rolled up or serviced.
- Arrangement fee 1%,
- Exit fee 2% of loan.
- Loan To Cost- 60% of land; 60% of build.
New Small Development Lender
We are very aware that locating funding for development is probably harder here than in the south of England. However, amongst our lenders we have one that is happy to look at schemes for houses and flats in Scotland. They will lend up to £500,000 per development to a maximum of 60% of GDV.
Another lender will finance housing schemes for experienced developers in areas in the north of England where there is a strong demand to the value of £1,250,000 up to a maximum LTV of 70% (this LTV includes rolled up interest).
To add to our growing list of lenders we have sourced one that works on competitive terms based on a maximum loan of 55% to Gross Development Value. Terms are normally:
1% arrangement fee
Interest is currently around 7% to 7.50%
There is an exit fee of 1% to 1.50% of GDV
London and Home Counties only.
Development Finance in Scotland and the north of England
We are very aware that locating funding for development is probably harder here than in the south of England. However, amongst our lenders we have one that is happy to look at schemes for houses and flats in Scotland. They will lend up to £500,000 per development to a maximum of 60% of GDV.
Another lender will finance housing schemes for experienced developers in areas in the north of England where there is a strong demand to the value of £1,250,000 up to a maximum LTV of 70% (this LTV includes rolled up interest).
If you would like more information please call or email us chris@cdpropertyfinance.com
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