The full version of this article, written by Kenny Campbell, Associate Director, appears in Project Scot, November 2022 issue.

Amidst the turmoil of the world right now, industry forecasts are showing stubborn resilience, predicting a definite continuation of activity. 

This month, we highlight how accessing development finance can help you keep building and taking opportunities.

Financing Development 

The property market is extremely topical. Sensationalist headlines sell, so there’s no surprise that much of the narrative revolves around the big headwinds – Brexit, Covid-19, Ukraine, supply issues, rising costs, labour shortages, spiralling energy costs and a cost of living crisis. 

Despite predicted adversity, there will also be opportunity with the right expertise and support. 

The property and development finance market remains open for business, with products available to keep the construction industry building. 

Development finance can generally get you the most extensive loan against your capital from the finance market. 

A development loan will typically come in two parts: 

• Part 1: help purchase a plot of land, or a building to be re-developed 
• Part 2: fund the building costs and drawn down in stages. Interest is only charged on the funds released, so although rates can be higher than other products, overall interest is comparable over the term of the loan.

The amount of funding you can get is dictated by three factors: 

• starting value of the plot of land or building 
• build costs 
• gross development value (GDV) i.e. how much the property will be worth once all construction is complete.

Each lender will have their own parameters for lending, but rough market averages are 50-60% of the current plot/ building value for purchase, 60-70% Loan to GDV, and 80%-100% build costs.

Key information lenders look for when applying for development finance are:

• Development Appraisal
• Schedule of Works
• Development CV
• Assets and Liabilities statement.

This information will usually allow an Agreement In Principle within days, before progressing to due diligence and underwriting. 

Each lender has a different preference of property type, location, risk appetite etc. At Breadalbane Finance, we have a trusted panel of lenders that cover ALL types and sizes of development, and we can efficiently raise the best funds for you.

Poacher Turned Gamekeeper 

As a Chartered Surveyor with 16 years experience in construction and development, I’m ideally placed to assist in the packaging of an application. I help borrowers to navigate the financial options available, using my experience in a consultative capacity.

Before approaching the lending market, I’ll review all the development information, highlighting the typical risks and pitfalls that are raised during diligence and underwriting of loans. 

Understanding our clients’ needs then clearly translating those to lenders secures the best deal for the client by placing them with the right lender at the outset. It also ensures we deliver speed of response and certainty of funding. 

Having regular dialogue with funders around their appetites for lending means we are in the know – no matter what type of development you are planning – of who is best placed to support you. 

So, whether your project is residential, commercial or mixed use, a single unit or a multi-unit scheme, or maybe you just need
exit or sales period funding, we have the in-house expertise to support you.

Every step of the way.

Get in touch with Kenny Campbell today.