Details of Planning Permission & Any Drawings
Planning details (or even a link to the relevant page of the planning portal) will allow ourselves and the lender to understand the scheme. By working through the planning documents, including the drawings, the lender can get a handle on the finished scheme and can use this information to assess that the quoted costs make sense.
Details of Any Planning Restrictions and Any S.106 or CIL Payments
Planning restrictions and CIL (Community Infrastructure Levy) payments are key. CIL can be of vital importance, as where the required payment is large, it will affect the profitability of the scheme.
Full Breakdown of Costs
A detailed breakdown of costs is crucial. Although a lender may accept the headline figures to start with, it is better to provide detail if possible. Only when the lender sees the detailed breakdown will they truly be able to sense-check the figures. In addition, without the full breakdown, draw down schedules are impossible to assess.
CV and Details of Your Development Experience
A development CV, along with proof of experience is very important to some lenders. Even if you’re an inexperienced developer, a CV detailing your experience in other areas to date is very useful.
By highlighting your credibility upfront, we can ensure the lender feels comfortable in your ability to handle the project. In cases where the lender is struggling to get comfortable with the application, it is almost impossible to drive the cost down by a significant margin.
Schedule of Works Broken Down by Stage
By breaking down the schedule of works in detail and by stage, the plan for the project becomes clear. By combining the information in the plans, the full breakdown of costs and the schedule of works, agreement on stage payments becomes far easier.
Details of the Team Involved (Architects, Contractors etc.)
The team you are choosing to work with will affect a lenders willingness to lend. Reputational weakness, a lack of experience or previous failed developments may cause an issue.
The flip side to this is that a strong team, with a strong reputation and track record will strengthen your application. Detail exactly who you are dealing with upfront to avoid delays and questions further down the line.
Asset, Liability, Income and Expenditure Summary
Every lender will want to see an asset, liability, income and expenditure (ALIE) summary before approving an application. It is important that you provide a fully completed ALIE as early as possible in the process.
There are two reasons for the lender wanting an ALIE completing. The first is that during the build your income may drop or even cease. If this is the case, the lender will be keen to see that you can support yourself and to understand to what extent you can absorb delays or unexpected costs.
The second reason is to judge your ability to support a personal guarantee for applications made through a corporate structure. Most lenders will want you to be able to support 20% of the loan amount in personal guarantee, backed by sufficient assets.
Details of Your Proposed Exit Strategy
A solid exit strategy is the key to a successful development. Whether you’re looking to let the property, or sell, you need to be sure your strategy is viable.
As the term of the property development loan ends, the lender will want to know they are secure in getting their money back. If you’re looking to sell, look at demand upfront and understand how long your project may take to sell.
Proposed Gross Development Value
The gross development value (GDV) is another important factor in whether the loan is likely to be agreed or declined. The GDV is usually expected to be at least 20% higher than the total project costs. GDV should always be backed by the opinion of two or more local agents, and ideally comparable evidence, if available.
Proof of ID, Residence and Deposit
Proof of ID, residence and deposit are always required to satisfy the lender anti-money laundering rules. It is best practice to provide this information either upfront or as early as possible to avoid delays further down the line.