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For clients who want to develop property, being able to diversify both in project type and funding and having flexibility with finances can lead to success in building projects. There is much scope outside of the traditional commercial or residential leasing models. With a slow property market, the ability to diversify and get creative outside of the standard more vanilla residential investment is essential for clients looking for a return on their money.

Make money work harder by adding value to property

The increase in volume of clients looking at add value to property, undertake developments or take advantage of a refurbishment opportunity has been significant over the last few years. As has the lending available to support this demand. The market saw a large increase in associated costs which made some projects less viable when additional finance overheads were considered, however market conditions appear to have stabilised, costs trajectory flattened meaning some projects are coming back online.

Many clients and wider market sentiments have challenged the notion that funding remains accessible and available, one area that is not in question has been that of development, refurbishment and conversion finance. Appetite to support projects of all shapes and sizes has remained, a realignment of pricing as with all debt has in fact brought the range of options closer together meaning previously discounted lenders (perhaps due to pricing) are now competing with more mainstream and well
known funders.

Alternative thinking

Many clients assess their property and view it differently, understanding how best to utilise and maximise space available. This doesn’t just apply to residential, but also businesses using their existing space, expanding and developing their premises or as seen across the office environment, potential repurposing of space. Market challenges often bring innovative and alternative approaches, sentiment suggesting a demand for smaller units, as opposed to large block office space – this being reflected in how our clients are utilising their property and investment funding.

Often clients take a fresh approach and re-imagine the layout and organisation of space. Smart conversion of properties such as splitting it into separate units can increase yields and we can connect you to lenders with an appetite for these kinds of commercial enterprises to increase revenue. Development finance can also be sought for more involved works such as adding a storey to a building to gain additional space that can be utilised for revenue-generating activities.

Experience versus first time

Undoubtedly confidence and experience come into play when reacting to challenging market conditions. Whilst some of the traditional lenders will generally offer favourable lower rates to clients with experience in development, lenders have both grown their product offering and new entrants appeared to include developers who may be embarking on their first project.

Economic conditions have resulted in projects that are increasingly creative with approaches outside of the usual development model including; purpose built student schemes, mixed use properties and re-purposed multi-let spaces.

Shifting economic conditions and changes to the property landscape have simply expanded the type of projects that investors are utilising to see a return for their money. This increasing range of development projects and property types means it’s necessary to access funding that matches needs.

Building my own Grand Designs…

A continued growth area remains that of self-build and regulated developments; clients building in their own back garden splitting titles, building that dream ‘forever’ home or simply the financials supporting the development which otherwise wouldn’t be attainable. This remains a competitive environment, lenders continue to support against high loan to cost ratios, some without any prior experience requirements.

What is critical for the clients, brokers, IFAs and introducers that we work with is a discussion around their project. Without understanding what lenders are willing to offer finance on, it is imperative clients know and understand whether their project is viable

There are lots of lenders who are active in this space with an appetite to offer finance for a range of development and refurbishment projects. Our finance team can guide you through the maze of lending terms, percentages and cut to what is and importantly isn’t available based on each client and specific project.