The case in brief
- Land value: £5m
- Build cost: £3m
- GDV: £21m
- Initial bridge of £4.22m (65% LTV)
- 90% of the build cost through development finance
The UK Government has continued to increase investment into infrastructure,housing and has relaxed planning regulations, showing its eagerness to keep building new homes and to keep the UK property market a first-class investment. On top of this, in recent years, development finance lenders have become significantly more competitive, aiding borrowers. Download our guide for more information.
Our client
Articus recently assisted an experienced developer with their project. The client was looking to purchase land without planning permission in Surrey with the idea of securing planning permission for 18 apartments within 6-8 months. The asset in question was valued at £6.5 million, and the idea was to build 18 flats on the site which would cost £8.3 million, with an expected Gross Development Value (GDV) of £21 million.
However, our client faced a common problem experienced by developers: buying land without planning consent. Of course, this is considerably riskier than land with planning, therefore lenders are restrictive.
Our solution
Articus Finance was able to navigate the hurdles and ensure the necessary financing. We secured a short-term bridging loan to buy the land and obtain planning permission at 65% loan to value (£4.22m). Once the planning was in place, our broker secured development financing to pay back the bridge and 90% of the build costs. This gave the client the financial assistance they needed to move forward with their development without having to put all of their liquid assets into the project.
The success of this case study illustrates the importance of securing the right development financing for your project. This is where the skills and expertise of Articus Finance come into play. We understand the complexities of development finance, as well as the motivations of developers. Get in touch today.