Money Saving Insurance For Property Owners

CD Property Finance is now an Introducer Appointed Representative for Business Money Insurance Services. This means that all our clients, whether property developers, investors or business owners, can now enjoy great insurance rates and top quality service from the experienced and helpful team at BMIS.



BMIS has a great general insurance product range and provides cover that is typically 10% to 15% cheaper than others without sacrificing the comfort of using high quality insurance names.



Working with BMIS, we can provide business insurance cover; liability insurance and contractors' all risks insurance; property insurance; commercial motor insurance; plant insurance and personal insurance.



All you need to do to benefit from this service is to either contact Chris Dowdeswell at chris@cdpropertyfinance.com or go online at http://www.bm-is.co.uk/ and quote PROMOTIONAL DISCOUNT CODE: BMIS1017.



Try it and see how much you can save!

Property Development Finance for part completed schemes

We have some good news for our beleagured developer clients:
Do you need?
1 - Finance for Part Completed Schemes.
OR
2 - 100% Finance.
OR
3 - Mezzanine Funding
We have been inundated with enquiries in recent weeks from house builders that find dealing with their bank a thoroughly depressing experience. Existing bank clients are still having their loans called in and new ones are met with a quick refusal or, even worse, a long, slow NO. If this is happening to you, we are here to help and there may be a little light at the end of the tunnel.

Best Wishes,

Chris
chris@cdpropertyfinance.com
www.cdpropertyfinance.com

100% Development Finance - Alive and Well

Just when we all thought that the days of 100% development finance were over for good, CD Property Finance has located a funder that has the appetite to lend to developers that have got a great scheme but no cash.

There are restrictions, of course. No flats, for instance. Maximum loan £1.25m. Maximum number of houses is five, and these must all be "family" homes and not very high end luxury houses. The lender will fund schemes in England and Wales only.

This is a great opportunity for experienced developers to get a scheme started that would otherwise remain dormant.

CD Property Finance welcomes your enquiries.

All the best

Chris Dowdeswell

CD Property Finance

VAT - PITFALLS FOR HOUSE BUILDERS

We have linked up with Wilkins Kennedy, Chartered Accountants for this important advice for house builders:

CAN’T SELL A NEW-BUILD HOUSE? TAKE CARE BEFORE YOU RENT IT OUT

If you are a house builder having trouble selling a new home you might, quite logically, be tempted to rent it out until house prices pick up again.

However, under HMRC regulations, you might be letting yourself in for some complex potential VAT problems.

Due to the current slowdown in the residential property market, some house builders are deferring their intended sales of dwellings and temporarily letting instead, and so becoming partly exempt.

As you are probably aware, if a new house is sold freehold or on a long lease (over 21 years in England; 20 years in Scotland) you can reclaim all of the VAT incurred on your building costs.

However, for short leases or lettings, HMRC can insist on a claw-back of some of the VAT incurred on building and development costs.

Put simply, the reason for this is that VAT on freehold sales is rated as zero, so you can recover all the VAT, whereas short lettings of new property are VAT exempt – so you have no right of VAT recovery.

How to check your position
For many house builders the amount of ‘exempt input tax’ related to their temporary lets is small (known as ‘de minimis’) and as a result they can continue to recover all of their input tax; but they must check to avoid VAT mistakes.

If you are in a large building firm you may already be partly exempt and familiar with operating a partial exemption method. However smaller building firms may not be so aware of the intricacies surrounding the whole area.

The ‘de minimis’ is a simple check which is based on the expected time period you will letting your building as a proportion of the economic life of that building, which for VAT purposes is ten years.

How de minimis works
Your exempt input tax is determined by applying the proportion to your total input tax. Provided your exempt input tax does not exceed £625 per month on average (up to £7,500 per year) and is not more than half of your total input tax, then your exempt input tax is ‘de minimis’ and you can recover it in full. What’s more, the ‘de minimis’ test applies to the total input tax incurred - including for example any input tax on general overheads such as bookkeeping costs.

However, if your building or buildings do not qualify for de minimis exemptions, you will almost certainly have to do one or more of the following:

* adjust the VAT previously recovered on your submitted VAT returns
* restrict the VAT to be recovered on your current and future VAT returns
* both adjust your past VAT recovery and restrict your future VAT recovery.

So, for example…
Let’s assume you have recovered £20,000 input tax on a house that you originally expected to sell for £300,000. Because of market conditions, at the end of the tax year you decide to defer the sale by letting for two years and so become partly exempt. A simple check for de minimis is:

£20,000 input tax x 2 year lease divided by a 10 year expected economic life of the building (the standard) = £4,000 exempt input tax

The £4,000 of exempt input tax is de minimis because over the tax year it does not exceed £7,500 or 50 per cent of your total input tax. So there is no need to adjust the VAT previously recovered on your VAT returns. If the input tax was incurred over more than one tax year, the de minimis test should be applied to the input tax incurred in each of the tax years separately.

A word of warning
The starting point for the repayment of VAT when you rent a house is the moment you decide to rent it – not when you sign leases – so you could be liable to VAT even though there is no rental yet coming in.

It’s well worth seeking advice
Naturally this article is only an outline of the VAT situation on letting new houses. If you are not familiar with all the complex issues that lie behind the legislation, simply call Bob Southey on 01483 306318 quoting CD Property Finance.

Commercial Finance Newsletter

Just to let you all know our latest Commercial Finance Newsletter was published last week. In this edition we offer advice on how to structure your business plan and give you a summary of the current lending available from UK banks.

If you would like to sign up to our monthly newsletter, please contact us by emailing newsletter@cdpropertyfinance.com. (We won't pass your details on to any third parties, it's only for use by CD Property Finance for the distribution of our newsletter).

We have also had two articles published on www.articlesbase.com:

- UK Residential Property Development Market View
- Summary of current UK bank lending for businesses

If you have ideas of articles you would find useful, please do let us know.

Housebuilder Article - Cash Barriers

We are pleased to announce that Chris Dowdeswell of CD Property Finance features prominently in the latest (May 2009) edition of the Housebuilder. This is the official journal of the National House Builders Council who provide the vast majority of new build home warranties.

In the article 'Cash Barriers', Suzie Mayes considers the type of lending now available to developers. She finds from speaking to people like Chris Dowdeswell that while there has been some improvements, getting finance is still a very tough task.

Chris provided comments for use throughout the article. Here's a quick snippet of these words of wisdom:

"If a developer owns their own site with little debt against it, there is a good chance of securing funding because the LTV will then be typically below 55% of gross development value (GDV) which is often acceptable by lenders" Chris Dowdeswell, principal, CD Property Finance.

"If we can see prices stabilise in the next three months, there may actually be some light at the end of the tunnel" Chris Dowdeswell, principal, CD Property Finance.

You can find the full article in this months Housebuilder magazine on pages 46- 49. We would love to hear your comments.

UK Property Market View

There are rumours of greater buyer activity in the residential market but I am sure you will agree that the messages are very mixed. Some developments seem to be selling reasonably well whereas others, for whatever reason, have hardly seen a viewing for months. Our view is that we are in classic early/mid recession "one step forward, two steps back" mode.

This is what happened in the last recession. In spring 1991 everyone was expecting a significant upturn but it was not for another 18 months that the true recovery started. This followed a prolonged period of lower interest rates. Let's hope that the promised increase in new mortgage lending transpires and that one or two more development funders emerge. These two factors should drive the market towards normality again. In this newsletter we have a piece on VAT that is important for developers that are holding completed properties until the upturn.

We also have the excellent news of an established lender returning to the market and who will consider lending on profitable small schemes. As always, your feedback and loan enquiries are most welcome.

Regards,

Chris
www.cdpropertyfinance.com