Development Finance Case Studies

ABC Finance Ltd. pride ourselves on unmatched customer service, unbiased advice and the aptitude to maintain close relationships with our trusted panel of lenders. If you’re looking to secure development finance or pursue a career in property development, this benefits you directly as we’re able to source the best rates and product type for your specific needs.

You don’t have to just take us at face value, read on for a selection of case studies focused on successful development financing projects.

To learn more about what we offer and the services we provide, don’t forget to check out our selection of development finance guides, the key things to consider before your first development or get answers to the most frequently asked questions on property development financing.

Case Study 1 – Large Residential Development

he proposed development site had previously been used as a dairy and had planning permission in place for the building of 19x one-bedroom apartments and a single commercial unit. The project was expected to appeal to commuters who worked in London and demand was projected to be very high.

The clients were keen to get started ASAP and the sale needed to be completed as quickly as the vendor was looking to release their cash from the site. As such, the pressure was on to ensure funds were released in a timely manner.

The clients were also keen to ensure the lender used would be willing to fund future projects as their previous lenders were no longer active in the market.

The key requirements

Purchase Price:	£700,000
Estimated GDV:	£3,200,000
Amount of loan required:	£1,800,000
Rate offered:	7% Per Annum

Solution

We approached one of our top development finance lenders, who were able to commit to expediting the application. A meeting was arranged between ourselves, the clients and the lender to iron out any issues in a timely fashion.

With the loan to gross development value under 60% and highly experienced clients, we are able to negotiate an interest rate of just 7% per annum.

The loan was able to move forward to completion quickly, and was managed closely through the valuation and legal process to save time where possible. Development is now well under way.

Case Study 2 – Mixed Use Apartment Development

Our clients were highly experienced in the building industry, project managing a number of turn-key developments for various property investors. Although they were highly experienced in delivering developments in Central London, they were yet to undertake a development project of their own.

They were looking to purchase their first property development, and begin their transition from builder to property developer. They had an offer accepted on a property, a former bank with planning permission to convert to five flats with a commercial unit on the ground floor.

Although they were experienced builders, the world of finance was new to them and they needed to start from scratch to gain an understanding of the process.

The property was situated in an area with excellent demand and the works were well within the clients’ capabilities. The main issue was that the level of deposit needed was in excess of the amount available to the clients and the lack of experience in tackling their own projects.

The key requirements

Purchase Price:	£550,000
Estimated GDV:	£1,276,700 + (£480,000 Additional Security On A Residential Property)
Amount of Loan Required:	£867,134

Solution

We approached a development finance institution who were happy to work with the clients, despite this being their first project. They were also willing to take a second charge on the clients’ additional property, meaning there was no need to involve two lenders, making the process simpler.

The application was approved quickly, and we were able to secure a second charge on another property that was owned by the clients as additional security. This allowed us to reduce the required deposit to a level that was affordable to the clients.

The loan completed, and the clients were able to begin their journey as a property developer.

Case Study 3 – Part-Built Development

A client approached us looking for funding for a part-built property development in Preston. Planning was in place for 7x five bedroom houses, which were well sized and located within the area.

The client had funded the build up until the point of enquiry, but was running out of funds and didn’t want to put a stop to construction.

Although the client was fairly new to property development, he had a strong history of project management and a number of transferable skills. On top of this, works to this point were well documented.

Lenders are often put off by part-built developments, due to lack of control over the works that have already been completed, so the client contacted us to put his case across.

The key requirements

Loan Amount Required:	£1,127,715
Proposed GDV:	£2,135,000
Term Requested:	12 Months

Solution

After picking up the case, we were able to issue terms on the same day and submit a full application shortly after. The process moved forward quickly, which allowed the client to continue the development with no delay in construction.

Case Study 4 – Title Split & Barn Conversion

As the client was looking to downsize and wanted to sell his property, he was keen to ensure he achieved the highest possible sale price. This would leave him with a strong nest egg to enjoy in retirement.

The property was located in a premium location with limited housing stock coming to the market, meaning demand for the finished product was very high. The location of this property was particularly appealing as it was located within a large pocket of land, meaning it benefited from a large garden and no neighbours.

The transaction involved splitting the title to release the barn and surrounding land from the main house. The barn was then transferred to an SPV (Special Purpose Vehicle) Ltd. company, which was used to manage the development.

This made the transaction more complex, as the property that was security for the loan was taken from a larger plot, which had previously formed part of the client’s main residence.

The key requirements

Development Costs:	£850,000
Repayment of Existing Loan:	£150,000
Total Loan Required:	£1,000,000
GDV:	£2,250,000

Solution

We approached a market-leading development finance lender and due to the client’s strong track record, they were comfortable with the risk. As such, we were able to issue terms very quickly.

ABC Finance Ltd. secured funding for the project at 100% of build costs, allowing the client to proceed without the need for a deposit at a rate of 7% per annum. The loan was offered with rolled up interest, meaning there were no monthly repayments for the client during the project.

The client was delighted with the loan terms available and the application was able to rapidly move forward to completion