By Guy Murray, Head of Development Finance, West One Loans.
The development finance market is very buoyant at the moment and property developers have options as to how they finance their new builds. There are many specialist lenders who understand the specific needs of house builders whatever their size. The availability of funding is larger than it ever has been and we are seeing more lenders, particularly bridging lenders, diversifying into the development finance space. With all this competition, interest rates are also very competitive.
West One specialises in development finance for small to medium size firms but we can also support developers throughout their projects, from buying the land through to exiting the loan on a long-or- short-term finance solution. The broad product range within the West One group allows the firm to be really agile throughout the property project journey; and it is this which gives our intermediaries and our client's peace of mind when entering into the transaction.
For example, a SME house builder bought land to build a block of six flats and used a development finance loan. Once the build was completed the builder sold two of the flats to repay the original loan and too out buy-to-let mortgages on the other four flats as rental investments. This was all done seamlessly as our differents divisions work closely together.
We are acutely aware of the impact the Covid pandemic has had on house builders with the shortages of material and labour. Inevitably, build costs have risen and in some cases the original budget, even with contingency built in, is no longer viable and the developer requires more capital. As an agile lender, we will support the developers as much as we can in these scenarios. By working closely with the monitoring surveyor on the build we can restructure the loan facility to ensure the development is completed.
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