At Mesa Financial our specialists are experienced at finding the right development lending solutions, even in some of the most complex of cases.
Since the start of Covid-19 and the U.K. departing the European Union, a drop in labour and rising build costs have impacted development projects across the U.K. This means it has been increasingly difficult to be able to borrow on development projects as lenders have needed to scrutinise costs in even more detail and mitigate further risk.
In this particular scenario, our client’s goal was to purchase a slightly dilapidated property in South East London. The borrower has been a contractor for over 25 years and has worked within this particular micro-location, meaning he understands the local area and capital values. His aim was to purchase the property and apply for planning permission in order to increase the overall square footage to create a luxury high value unit with a GDV of £2,700,000 +.
Challenges of funding development projects
There are a number of factors that a lender will look for when underwriting development projects. Firstly, the client’s development / construction experience. Secondly, the underlying real estate; liquidity in the area, the nature of the scheme making sense within the particular micro-location. Thirdly, the clients underlying wealth.
The result for the client:
- Lending amount – £1.725m
- Interest rate – 8% pa
- Total LTV – 71%
- If the client fails to achieve planning a build facility will be made available in order to refurb the property in its current footprint. If the client is successful in his planning application a build facility will also be made available in order to refurb the property and construct extensions across the property – using a flexible lender that can fund either outcome was of paramount importance on this project
- The client also required the correct tax advice as he was purchasing the asset with an SPV. Mesa Financial also own an accountancy firm (Goldbridge Partnership) that provided the necessary advice to streamline the process
The Mesa Financial Service
If you are looking to fund development projects and want to make sure you are receiving the best structured terms available then it is worth contacting the Mesa Financial team to see how we can help you. We always aim to add value to our clients by finding a deal, often bespoke, with carefully negotiated terms to suit the client’s interests.
All of this with the friendly and professional service that we have become renowned for. We look forward to working with you.