FUNDED: 6-Unit New Build

This deal came via an existing client who recommended us to Experienced Investors who were looking to diversify and get their first residential development underway. We first met them in early 2019 to discuss the market as a whole, the different ways in which the deal could be structured as well as the various funding options open to them, considering both commercial and private funding options.  

From our initial discussions and with a funding strategy formed, they included that information in the development appraisal and bought Motherwell, with planning consent for the conversion of an old commercial unit into apartments, but after input from their Architect and Planners, it was deemed more suitable to deliver these units via a new build scheme and a planning submission was made for approval on the revised scheme. This was approved promptly and without any further objections.

Given the existing security structure already in place over their investment company, coupled with their experience as first-time developers, we were restricted in our funding options which ruled out retail bank funding, despite the loan-to-cost and loan-to-GDV ratios being within parameters. After thorough research, we provided the client with three sets of terms, from two Challenger Banks and a private funder for their consideration. 

The borrowers purchased the site using their own funds and given the preferable pricing and flexible security structure available, we progressed with a Challenger Bank delivering 100% of the remaining costs to complete the project. 

Thanks to the client's professionalism, and well-organised pack the initial due diligence process was swift and we progressed to valuation in a short space of time. On receipt of the valuation and QS report we were delighted to achieve credit approval and move into legals to get the deal completed and funds released.

 Due to matters out with the borrowers control there was a significant delay. The appointed contractor, for personal reasons, pushed the build programme back by 2-months which delayed the date of drawdown for the loan. The client, dealt with the unforeseen issues with patience and persistence allowing us to re-commence the process and complete legals, enabling drawdown at the end of last year. The lender was exceptionally flexible and tried a number of solutions to assist the borrower to navigate the issues which presented themselves.

Up until this development, the clients had been solely focused on investment properties and portfolio building. During the process, we were able to share with the borrowers useful contacts with Surveyors, Contractors, Land Agents and Solicitors to help grow their development focused network. 

As well as funding, we also assisted the borrower with information and direction on the required 10-year latent defect insurance to ensure the completed units are correctly warrantied and mortgageable when it comes to selling.

The build is now well under way and we look forward to seeing the completed product in March/April of this year, we are also now looking at their next two funding requirements.

The clients commented;

“Edward & Mark put together the funding package for our first new build development this year. It is always refreshing to find people who are a pleasure to work with and great at what they do. They bring energy and a genuine enthusiasm to an area of our business that can often be laboured and frustrating. They have been meticulous on the detail and generous with their time, freeing us up to focus on other areas of the project. Moving forward, we look forward to Ed and Mark playing a close role in the continued growth and financing of our company. Many thanks to you both we wish you a successful 2020.”

Concept Financial Group are financiers providing debt and equity funding for property developers across the UK.

If you or any of your network require funding please get in touch:

[email protected] [email protected]