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Property Development Finance

Draw-down facilities to enable a ground-up, conversion, or other significant project build. We will not be beaten!

What is Property Development Finance?

Quite simply, it’s a type of loan which provides money specifically for property development, secured against the property development “site” itself.

Most property developers borrow money to finance their projects, and such loans usually provide a lump sum towards the purchase of the land or property, followed by a specific amount made available to cover the “Costs to Complete” the project i.e. the build costs and any associated professional fees and other costs. The Costs to Complete part of the facility is made available in tranches, and in arrears. So in some instances the developer would have to cash-flow the onset of the works, so the lender can then reimburse these costs at pre-defined stages. The build costs part of a Development Finance facility therefore works in staged payments, and in arrears.

Being a specialist development finance broker since 2007, we are proud to boast perhaps the most extensive range of funders along with years of experience, giving us the necessary tools to pair you up with the right funder. Our panel of lenders includes High Street banks, Development Finance institutions, specialist lenders, family offices and private individuals.

More recently there has been a large influx of specialist lenders moving into the Development Finance marketplace, all with varying appetites and requirements, so it has never been more important to use the experience of a trusted broker like ourselves.

Being a specialist development finance broker since 2007, we are proud to boast perhaps the most extensive range of funders along with years of experience, giving us the necessary tools to pair you up with the right funder. Our panel of lenders includes High Street banks, Development Finance institutions, specialist lenders, family offices and private individuals.

More recently there has been a large number of specialist lenders move into the Development Finance marketplace, all with varying appetites and requirements, so it has never been more important to use the experience of a trusteddevelopment finance broker like ourselves. Manchester based Positive Commercial Finance is THE property development finance specialist broker.

What is Property Development Finance Used For?

The most common use is for the development of residential housing schemes (including Private Rented Sector, or “PRS” schemes, and Affordable Housing or Social Housing schemes) of any size, in any location in the UK. In addition, lenders can also fund mixed-use schemes, commercial schemes, student accommodation (including Purpose Build Student Accommodation schemes, or “PBSA” schemes), hotels & leisure, retail, industrial schemes, Permitted Development Rights schemes, and so on.

We can facilitate the most appropriate property development finance options for Senior Debt, Stretched Senior Debt, Mezzanine, Equity and even Joint Venture finance. So, whether you are looking for the cheapest rates, or the highest leverage, we can help.

In addition to whole of market coverage of development finance lenders, we have exclusive access to a number of private property development finance lenders and products which are simply not available via other brokers. The strong relationships we have forged with our lenders sets us apart from other brokers and makes us the number one choice for any developer looking for finance.

There are many variants across such facilities, including the Loan to Value (or Loan to Gross Development Value) and Loan to Project Costs which determine exactly how much a lender can provide, the costs of the facility (and any up-front or application costs), and the on-going administration of the facility such as Project Monitoring and facility draw-downs. In addition, other factors such as Personal Guarantee (“PG”) requirements, speed of transacting & professional fees can really separate one lender from another.

What are the Key Features of Property Development Finance?

Loans from £50,000 with no maximum loan amount.

Up to 75% of GDV, or 90% of Project Costs using Debt Finance

Up to 100% of Project Costs using Equity and/ or Joint Venture Finance.

Or, 100% development finance is available with additional security.

Arrangement Fees from 1%

Development Finance Rates vary dramatically, but interest rates are from 4% per annum, with interest being “retained” or “rolled-up”, so you don’t have to pay monthly.

Many options with no exit fees

Up to 24 months (or longer, by arrangement)

Available for schemes across the UK

Security requirements vary, but typically on a First Charge basis.

Options with no Personal Guarantees

Commercial Development Finance is also available from our panel of commercial property development lenders.

What are the lending criteria for Property Development Finance?

Detailed Planning consent needs to be granted (or Outline Planning with some reserved matters).

Development Experience is essential for larger schemes. Some lenders will fund “first-time” developers.

Fixed price contracts with main contractors are preferred, but not always necessary.

Most property development finance lenders do not expect pre-sales to be in place.

A clean & clear credit profile helps, and is essential for the cheapest lenders, but adverse credit can be considered by some lenders.

A valuer will be instructed to comment on the current site value, the proposed GDV, along with appropriate market commentary.

A Monitoring Surveyor or Quantity Surveyor will be appointed by the lender, to audit the proposed build costs, to monitor progress on-site, and to assess draw-down requests for your building development finance.

Draw-downs are in line with the build programme and cash-flow, to be authorised by the lenders monitoring surveyor.

Commercial Property Development Lenders will generally require a pre-sale or pre-let to be in place.

What information would I need to provide?

A Financial Appraisal

Detailed Build Costs

Cash-Flow

Planning Consent (and accompanying plans/ drawings)

Details of any Section 106 or Community Infrastructure Levy (“CIL”)

Details of the procurement method (will you be using a Main Contractor on a Fixed Price JCT, or will you be building yourself, using your own team?),

Details of the professional team (contractor, architect, structural engineer, CDM co-ordinator etc, where applicable) – this is particularly important when applying for joint venture development finance.

Schedule of the proposed accommodation (number of units, size, beds/ baths) and a breakdown of the proposed selling prices, to give your total Gross Development Value.

Details of the borrowing entity/ borrowers

Developers/ Applicants CV’s

Any information to support the proposed GDV (comparable sales and agents’ opinions).

What varies from one Development Finance facility to another?

This can include the Loan to Value (or Loan to Gross Development Value) and Loan to Project Costs which determine exactly how much a lender can provide, the costs of the facility (and any up-front or application costs), and the on-going administration of the facility such as Project Monitoring and facility draw-downs. In addition, other factors such as Personal Guarantee (“PG”) requirements, speed of transacting & professional fees can really separate one lender from another.

How do I get property development finance?

That’s where we come in. Once we have established your requirements and the case specifics, we can very quickly funnel down the options to usually a handful. To properly assess a project, a lender will need to see a detailed Financial Appraisal, Detailed Build Costs and a Cash-Flow, the Planning Consent (and accompanying plans/ drawings), an understanding of the procurement method (will you be using a Main Contractor on a Fixed Price JCT, or will you be building yourself, using your own team?), a schedule of the proposed accommodation (number of units, size, beds/ baths) and a breakdown of the proposed selling prices, to give your total Gross Development Value. We will package the details and make a presentation to the relevant lenders, who will then provide us with Heads of Terms, outlining what they are proposing to offer, and at what cost.

Positive Commercial Finance as a property development finance broker can provide the most appropriate options for Senior Debt, Stretched Senior Debt, Mezzanine, Equity and even Joint Venture finance. So whether you are looking for the cheapest rates, or the highest leverage, we can help.

In addition to whole of market coverage, we have exclusive access to a number of private lenders and products which are simply not available via other brokers. The strong relationships we have forged with our lenders sets us apart from other brokers and makes us the number one choice for any developer looking for finance

Can I get 100 development finance in the UK?

100 Development Finance in available throughout the UK. This can in in the form of Joint Venture Development Finance or “JV” Development Finance, and is available with competitive property development finance rates.

Criteria overview

  • Cheapest rates guaranteed
  • Up to 36 months
  • Loans from £100K to 100 Million
  • Any location
  • Options with no exit fees
  • Residential commercial mixed use

Frequently Asked Questions

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By submitting this form you confirm that you are happy to submit your data, which will be used solely for the purposes of your enquiry. You can view our Privacy Policy here.

Positive Commercial Finance is a trading name of Business Financial Solutions Limited. Registered in England & Wales 06451075. Registered office address 1 Harvey Street, Bury BL8 1NL. Authorised and regulated by the Financial Conduct Authority (716012). Full members of the NACFB and FIBA. ICO registration reference Z1196910.

We are a credit broker, not a lender. We work with a panel of lenders who may pay us a commission. This amount varies between lenders.

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