There are several exciting opportunities – for new and existing property developers – including energy efficient developments, conversions of retail units to flats and proposed reforms of the planning system by the government. As a result, we are seeing an increase in development inquiries so we have created this short introduction to development finance to help clients – existing and new – understand the type of projects that development finance can be used for, the costs involved and how the funds are paid. What is a development finance? There are several exciting opportunities – for new and existing property developers – including energy efficient developments, conversions of retail units to flats and proposed reforms of the planning system by the government. Property development finance is a type of short-term, secured finance that is used for many small, medium, and large-scale property projects, including renovations, office block conversions or to purchase and build on previously undeveloped land from the ground up. Development finance is used by many different types of people from private individuals to portfolio developers and small to large companies. Unlike a traditional mortgage, development finance is a short to medium term loan that is secured against the projected gross value rather than the current value of the land/property. It can be complicated so it is beneficial to use an experienced broker. What can development finance be used for? What are the different types of development finance? • Residential property – development finance may be used to build one or more house, convert an office block or retail unit into houses/flat, build an apartment block or renovate a residential property. This can be used by developers looking to sell or rent the property or individuals looking to build their dream home. • Commercial property development – used to build
Read more →Development finance began to show a fair amount of potential as of late. Buying a property at a fairly low initial price and then developing it to be sold or lent at a higher price seems like a good investment for many people. It brings enough profit so that in the long run, you can recover the money you have invested in the initial purchase. But still, do you understand exactly how this type of finance works? You may know a thing or two – but understanding the basics will make the difference between starting a successful business – and one that will leave you bankrupt. What Does Development Finance Offer? There are several types of finance options for development, each one targeting a certain kind of development. A smaller development, for instance, may involve a simple aesthetic renovation that has nothing to do with the structure of a property. This can be anything from a wall painting to a change in staircase rails, door knobs, and other similar items. A lender, however, may also go for redevelopment finance – which is basically classic development finance that also handles the structure of a property. Those who want to apply for residential development are generally the ones who also need to dive into heavy work to the house structure. In other words, if you are planning to extend the house or to rearrange the walls, you will have to apply for redevelopment finance. While this may be rather costly, it can also drastically increase the value of a property. On the long term, this may bring you a fair amount of profit. Last but not least, property development finance will allow you to develop a building from scratch. Say that you have a piece of land, but you have nothing worthwhile on it. If you build
Read more →