The appetite for property development finance in all its guises has increased dramatically in recent years both from the availability of funding and clients looking to build their investment portfolio and materially add value to new and existing assets.
The development finance market has benefited from both new entrants into the market and also established lenders either re-entering or reviewing their development finance criteria. Short-term providers who expanded their proposition to initially include support for refurbishment of property, are now also accepting some development projects.
Both this increased availability of funding and competition in the market have coincided with government initiatives encouraging the conversion of some commercial space (office or retail premises) into residential dwellings under permitted development rights, which has also allowed for some relaxation around residential extensions and improvements.
That said, it remains one of the most complex and confusing funding sectors. The ever-expanding volume of lenders offering a version of development finance, the genuine cost and process benefits of using a professional broker are perhaps more substantial in this sector for that reason.
It isn’t always as simple as quoting the lowest rate or highest gearing, the most appropriate terms for a given project are dependent on a multitude of variables; Client status, project experience both directly and indirectly, capital requirements, proposed debt size, post-works completion values, initial site or property valuation, build type, concentration of units, exact site location, project duration and many other associated risk areas.
With our knowledge and experience, Omega remains one of the primary brokers in this market, with direct access to over 70 development lenders operating across all areas of mainland UK.
Whether you are a major housebuilder, an experienced developer or looking to finance your first project we have a funding solution available for most projects, large or small.
Loans can be arranged up to 90% of all costs (including purchase, building related and finance costs) in many instances with no requirement for mezzanine finance or equity/profit sharing with the lender.
Interest rates start at 3% above bank base rate, with interest often being rolled up into the loan, allowing borrowers to make the most of their cashflow.
If a developer is willing to enter into a profit share arrangement with the funder it is even possible to arrange finance to cover 100% of the project costs other than the valuation fee and some relatively minor initial legal costs.
We have direct access to Lenders supporting all transaction types, and whilst one lender may be the most appropriate for development finance, this doesn’t mean the same would apply across all sectors:
