Property development can be a complex and confusing process, whether converting a current property into a building or constructing new housing. Securing suitable development finance is an important step to turn the plan into reality.
Property development finance is a tailored funding solution that is designed to fund the purchase of land or property and the costs associated with construction or refurbishment. The funding is released in multiple steps as the project progresses. The tailored approach of releasing funds as drawdowns allows the lenders to monitor progress while giving developers access to capital when needed.
For housing development finance, the traditional funding approach doesn’t work. This is why there are different categories of development finance to match your project type:
This category covers the wide range of residential property development projects, including new constructions, conversions and major refurbishments. This can be useful for developers looking to unlock value through construction or redevelopment.
This is more suitable for larger-scale residential schemes, such as housing estates or apartment blocks. Some key factors that influence the overall approval chances include location, demand in the local market, planning consent, and projected sale values.
As the name suggests, commercial development finance is designed for non-residential projects, involving offices, retail units, warehouses, or mixed-use developments. The lenders may assess additional factors such as tenant demand, lease agreements and commercial valuations.
Lenders in the UK carry out a detailed assessment for development finance. Key areas lenders typically review include:
Project viability and location to understand whether the project is realistic and well planned. Market conditions and demand in the area are often considered.
Applications with full planning and the required permissions achieve positive results. Without approvals and planning, projects may seem higher risk and may face stricter lending terms.
Detailed costs and development budget provide lenders with the confidence that everything has been planned and the budget reflects real-world build costs.
Gross Development Value (GDV) assessment plays a vital role in how much funding may be offered by lenders in the UK.
Whether planning a residential project or a commercial building construction work, AWS Private Finance is here to discuss your project and help take the next step towards securing development finance.
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