What is property development finance?
Property development finance is finance used to fund residential or mixed-use property development projects.
CA bridging loans can be used to acquire properties with planning permission, or properties which have planning potential. CA can, if required, offer funding to assist with the cost of the property development. These development loans are generally written on different terms to CA bridging loans.
What type of developments do you lend on?
We typically lend on residential and mixed use projects in London and the Home Counties. We can lend against the following types of development projects:
- New build
- Permitted development
How can your bridging loans fit my development?
We can tailor our finance to fit the precise needs of your property development. Here are the key features of our loans:
- Loan from £50,000 – £10,000,000
- Maximum Loan to GDV of 60% if build costs exceed £500,000
- Maximum Loan to GDV of 65% if build costs are less than £500,000
- Loan secured by first legal charge on the property or site
- Loan structured to include 100% of the build costs, professional fees and any s.106 and CIL contributions, plus an amount to cover interest.
- A build float which is released as works progress. We will appoint a project surveyor to monitor the works. They will produce certificates against which we will release funds. The facility will also contain an allowance for these fees.
- For larger and more complex developments, we may need to commission a ‘pre-PMS (Project Monitoring Surveyor’s) report’. This is to satisfy us that the proposed build budget is sufficient to complete the development. If this report is required, the project monitoring surveyor will be instructed at the same time as we commission the valuation report. We will obtain quotes from our panel firms and will collect the fee from the applicant before confirming the instruction.
What is GDV?
The Gross Development Value (GDV) of a development project is an estimate of the market value the development is likely to achieve once works are completed.
As a general rule, we would expect the developer to make at least a 20% profit on cost.
How much can you borrow?
We base the loan amount on a percentage of the Gross Development Value (GDV. We lend to a maximum of 65% of the GDV dependent on the size of the project, with a maximum of 80% of the total costs.
On a typical loan, we fund up to:
- 65% towards the purchase of the property
- 100% of the costs of the build
- 100% interest & fee rollup
as long as this totals no more than 60%/65% loan to GDV dependent on the size of the project.
If you’re looking for additional funding, we will consider working alongside a mezzanine lender on your project.
How does property development finance work?
To apply, you will need to call us on 020 3857 6350 to speak to one of our lenders to discuss your requirements or email us on email@example.com. If the requirement meets our lending criteria, we will start the loan process:
- Initial application
- Heads of Terms
- Due diligence, KYC (know your customer) and account opening formalities
- Panel valuer quotes
- If the applicant decides to proceed, solicitors and valuers are instructed and for larger more complex projects a pre pms report may be required (loans remain subject to formal approval at this stage)
- Formal approval process
- Once approved, we issue the formal letter of offer.
- Build float advances (development finance)
Do you lend to first-time developers?
No. The loans we offer are only available to experienced developers. We require you to demonstrate that you have commensurate experience to undertake the project.
Can you lend against sites without planning permission?
We often work with borrowers who purchase properties at auction or on the open market with the intention to secure planning permission for future development. If a planning application is pending or not yet submitted, we may be able to offer you an initial bridging loan. In such cases, we will need to be satisfied that the existing use is viable if planning is not granted. Once you have received planning, we can convert the bridging loan to a development loan.
What information will you require from me?
You will need to provide full details of your project. This might include:
- The purchase price or current value of the property
- A full breakdown of the development costs
- Expected end value (GDV)
- Contingency plan
- Clear timescales (schedule of works and build stages)
- A CV detailing past commensurate experience
- Details of your likely professional team (contractor, structural engineer, architect etc.)
- Planning permission/application
- Exit strategy(sale or retention as an investment.
How soon can I have the money?
CA carefully selects its professional panel of valuers and solicitors to prioritise speed and service. We always pay close attention to your completion timescale and we benefit from decades of experience funding auction purchases so our processes are set up to move quickly.
We do not allow dual legal representation, so you will need to instruct a solicitor to act for you who has expertise in undertaking property development transactions.
The build float is released as works progress. We will appoint a project surveyor to monitor the works. They will produce certificates against which we will release funds. The facility will also contain an allowance for these fees.
What if I need to extend the loan?
We have been lending in the market since 1983 and have a strong understanding of the delays and issues that may be encountered on development projects.
We are there to support you throughout the project. You will have a dedicated Lending Manager to speak at any point from initial instruction through to repayment of the loan
Start your development loan application now. Call 020 3857 6350 now to talk through your finance options with one of our experts. Or email us at firstname.lastname@example.org, and we’ll be in contact very quickly.