Property Development Finance for Businesses in London

 fundamental facilities play an essential role in all types of social movements, especially in business. And sometimes, they are needed for similar businesses to be pursued to the fullest. As such, properties must be developed. But given our financial situation, that concept comes across as more of an ambition than a possibility. After all, not everyone is privileged enough to come up with the needed funds to improve their environment right away. And if they do, it usually comes at a very high cost. Luckily, though, there is the option of making property development finance support from companies required to take on riskier situations.

Banks are commercial finance resources and they are more concerned about investment returns than they are of its implications. Given this, it'll be hard to approach them for a loan to improve or expand your business or create a structural means to drive in more interests. Also, they are strict when it comes to qualifying applications, focusing on a person's credit rating and his ability to pay, among others. And they do not just hand out huge amounts of cash for projects with a lesser projected value. Property Development finance companies work with a different set of preferences and criteria. So they can ably provide property development finance aid even if you do not meet the typical requirements.

This, however, does not mean they don't screen requests and qualify them accordingly. Development finance institutions may be tasked to take on riskier deals and intervene in areas where domestic and foreign capital markets don't reach. But that does equate to careless propagation of funds.

First of all, lenders will be reviewing your experience as a property developer and figure out if you can expertly execute the plan with minimal costs. If you are new, then it is highly unlikely you will be getting the full amount you're asking. And there's location, profit potential, and development purpose. For DFIs, it won't be necessary for all three to be favorable. But the final two will have a great impact on whether or not your financial assistance. They are looking for something worthwhile and are not involved in helping businessmen who cannot contribute to their liquidity. Eventually, they will also study the economic power of the developer. Yes, it is a given that those asking DFIs for loans are not financially sound. But if you are an entrepreneur that can provide more equity at the outset of a development project, lenders will find your mission more favorable and grant you the financial support you need to get things on their way.

With this being said, property development finance solicitation is not something you should take on lightly. Although development finance institutions are essentially obliged to take on your type of case, it does not mean you can just submit any real estate development plan without thinking it through. As much as possible, it should be appropriate and innovative. And overall, it should contribute to their general objective of instigating change and progress - even if it is just for a start-up business. That is the only way you can guarantee yourself a bid.

Property Development Finance for Businesses

 

When it comes to property development finance, or construction finance - this is an area that we work in consistently and in fact makes up the majority of our loan applications. House building is big business in the UK due to the government's policy on increasing the number of affordable homes available. There is a great need for development finance from developers up and down the UK and especially in London. House building businesses are always looking for the best development finance deals in the market. There are dozens of development finance lenders in the UK market and knowing how each of these lenders works is very important in ensuring that an developer doesn’t waste time with an application that will ultimately be unsuccessful. 

Property developers and landlords place a huge emphasis on time as any lost time ends up costing them money so hiring a broker who knows the market can save them valuable time and money. Most development finance loans are based on a percentage of gross development value. Lenders will often fund 100% of the construction costs as long as the borrower has put sufficient equity into the deal. If the developer of the landlord has purchased the land and spent many months consulting architects and obtaining planning permission and paid for these services out of his or her own pocket then this will increase the level of the developers equity contribution. 

Once planning has been obtained for a particular sight there will normally be an immediate increase in the value of the site due the planning permission being accepted. This value will also contribute towards a borrower equity position. Most development finance loans have a term of 12 - 24 months depending on the build time of the scheme. The fees involved are usually 1 percent in and 1 percent out. Which means you will pay 1 percent of the gross loan amount upon drawdown of the loan and 1% of the outstanding loan amount upon pay back of the loan and completion of the scheme. Many schemes will require a development exit bridging loan to refinance any development finance and mezzanine finance secured on a completed scheme. 

This is needed if the developers haven’t sold all of the units and need more time. Silver Oak Capital has completed many development exit facilities for landlords and property developers. Another type of loan often needed by developers is a stabilization loan - which is needed following the completion of a commercial building with multiple units available to let. The owners will need time to get the asset up to a high occupancy rate with almost all of the units let and producing a regular income. Therefore arranging a slightly cheaper stabilization loan to give the developers more time to find these tenants is an extremely useful tool and will contribute strongly to any borrowers peace of mind. Do not hesitate to contact one of our professional to discuss your development finance or commercial finance needs. Silver Oak Capital are the experts in London development finance and bridging finance.