Development Finance for a Part-Complete Residential Scheme in Essex

Positive Commercial Finance specialises in arranging Development Finance for projects at every stage of construction. In this case study, we helped an experienced developer secure funding for a part-complete residential scheme in Essex after they had already invested significant capital into the project.

The Project

Our client purchased a former public house in Essex with planning permission for one new-build home.

After acquiring the site, they successfully obtained planning permission to increase the scheme to two residential properties.

Confident in the project’s potential, the developer began construction using their own funds.

However, as work progressed, they decided to secure external finance to complete the development while preserving capital for future projects.

The Funding Requirement

Many lenders are cautious when funding projects that are already under construction.

This is because they need confidence that the work completed so far meets the required standard and that the remaining budget is realistic.

Fortunately, this scheme was well documented.

Planning approvals, professional reports and construction records were all available. As a result, we were able to present the project clearly and give lenders confidence in the progress already made.

Our Approach

Positive Commercial Finance introduced the developer to a specialist lender with extensive experience of part-complete developments.

Unlike many lenders, they were comfortable funding a scheme that had already started because all of the required documentation was in place.

The developer had also invested substantial equity into the project. This meant only a low-leverage facility was required.

Lower leverage reduced the lender’s risk and helped us negotiate a highly competitive interest rate of 4.75% per annum.

Deal Structure

• Loan to Gross Development Value (LTGDV): 50%
• Loan to Cost (LTC): 60%
• Interest Rate: 4.75% per annum (4% over Bank Base Rate*)
• Arrangement Fee: 1.5%
• Exit Fee: 1.5% of the facility
• Additional Broker Fees: None
• Term: 12 months

*Interest rate reflected market conditions at the time the facility completed.

The Result

The developer secured a competitively priced Development Finance facility that provided the funds needed to complete the project.

By refinancing part-way through construction, they were able to preserve their own capital while keeping the development on schedule.

This case study shows that securing finance after construction has started is often possible. With the right documentation, an experienced borrower and an appropriate lender, Development Finance can be arranged at highly competitive rates, even on a part-complete scheme.