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Joint Venture Property Finance Joint Venture property finance can be an ideal solution for small house builders to fund their projects. Whether you’re a property investor with limited time or landowner searching for a partner to get your venture off the ground, joint venture property financing could be just what
Turned Down For property Development Finance? If you’re a UK house builder and have been declined for property development finance, don’t despair. A broker can assist in finding the right lender and completing any necessary specialist documentation. Despite an uptick in investment, small and medium-sized developers are still finding it
This is a genuine offer, and is mainly aimed at experienced developers or builders seeking to enter into their own developments. Ideally they want people who know what they are doing and can ‘BUILD’ the properties ( the funder would expect to see some experience as a builder either as a main agent or a subcontractor or building site experience as a site Project Manager or Architect etc )
They will genuinely fund:
The funder will charge interest & fee’s as per any development / bridging finance lender would. As they are putting all the money in and taking all the financial risk, they will then split profits on sale on a 50/50 basis
This 50/50 joint venture finance is ideal for builders who may have been sub-agents, and have the capability to build a small site or property conversion, but lack the initial funds. It becomes an ideal stepping stone, as after developing 2 or 3 projects , most builders are then financially self sufficient to self fund future projects of which of course you would then get 100% of any profits. Whatever your goal, we are here to help get you the lending you need to make your project a reality.
The funder will look to share genuine profits with you on a 50 / 50 basis. Bear in mind that THEY have taken ALL the financial risk on the project.
YES you have provided the management and building skills, but if you weren’t able to fund the typical 30% – 50% of initial land purchase prices, then the development wouldn’t have been completed by you anyway.
This is a true WIN – WIN situation, you still get to do the development site, you generate real cash profits from the project, and after doing 2 or 3 JV’s you will probably then have enough to self finance future projects and take 100% of the profits.
Let’s say you have built a few houses or designed or project managed a site. You see a new site thats ripe for development, has outline PP in place for 6 houses, with a GDV of £1.9m
The land costs is £500k and You know from experience that you can build these out for £800k. That would leave you with a profit of £600k before interest and charges. So lets say net its £500k real profit. BUT you don’t have any real cash, just £40k savings, which isnt enough to pay for 30% of the land value and stamp duty & fee’s etc.
So you don’t get the site and dont make any money…………
OR
You use JOINT VENTURE finance and build out the site and make £250k profit as your share. Now you might have enough to now self fund the next development yourself, OR you might choose to do one or two more JV’s and build up your residual funds. 2 years down the line you have £600k in savings, when another 4th site comes along….. you now no longer need to share profits 50/50 and can go on to develop that project and take 100% of all the profits.
We make it easy for you to apply,
When speaking to us about your project, here a handy guide to what we will need to know;
So a simple call or email to kick it off ! – The rest we can gather as we go along.
(upto £10m funding available for experienced / previous clients with proven track record)
Our team will take the time to understand your story and find a competitive solution that is tailored to your needs. Whether your development project is residential, a care home, student accommodation, office or mixed use, we will work with you to try to make it happen.
1.25% pcm
Minimum annual Interest rate
(typical rate 1.35% pcm)
70%
LTV overall against GDV
3 – 15 Months
24 months Max term available
We have lenders that will fund
It’s EASY to get started
Lending In More detail
We will provide up to 60% of the initial land purchase value and 100% OF THE DEVELOPMENT COSTS (INCLUDING FEES) and roll up the interest provided that the total Facility does not exceed 70% of the GDV estimated end value.
Higher L.T.V. if further security is available.
From enquiry to completion, we’re here to help you through the borrowing process. Over the years, we’ve refined and perfected our application process to provide you with a seamless and intuitive experience. ONE simple enquiry and we will check your project and offer you a lender that WILL offer to fund 100% of the build costs.
We take a very hands-on approach to our residential development finance. We like to meet clients face-to-face, and to visit the development site to see its potential for ourselves. We study the plans, and research the local market.
100 Percent Property Development Finance loans are short-term funding loans, used to develop either an existing building, i.e. refurbishment, conversion, or a new build. The property Development Loans are usually taken over a period of between 6-18 months. This really depends on the type of Development; with a light refurbishment it could be as little as 3 months, and with a larger scheme up to 18 months
New Builder ? or previous Impaired credit history ? perhaps even a bankruptcy in the past ? don’t worry we know the building trade isn’t always smooth sailing. We can arrange funding for all residential and commercial development projects even if you are a first time developer. Regardless of your experience level, credit history or development project, we can help.
If you have current or recent ccjs we can still look at getting you development finance. We can even get development finance for discharged bankrupts, just make sure you tell us all the bad credit information so we can source the development finance lender that will accept your credit history.
Discharged bankrupt – you can get development finance, we just have to declare everything upfront, and lets be honest you wont get 0.64% rates at the start, your rate swill be 1% + pcm for the first few projects until you prove your track record.
First Time Developers With Little or No Experience
For Property Developers with little or no previous experience, we can still provide finance to get you up and running whilst most high street lenders will not entertain developers with no experience we have many other lenders who will look at the bigger picture, furthermore we are experts in dealing and packaging your loan application to give you the very best chance of getting finance for your first project, we work with all types of developer and have had many years of experience providing Development finance
Experienced Property Developer, Development Loans.
So what is an experienced Developer? Generally, you will have completed at least 4 to 5 projects and sold on for a profit. A builder or building contractor would not be considered a Property Developer, neither would someone who developed and kept the finished properties in a portfolio. The key is the selling. Also, there are many skill sets that a Developer has that a Builder would not possess. As always, experience and dealing with the many pitfalls that come with Property development, selling on, keeping a tight control over costs and not overdeveloping (something some builders do proudly). It is great having the best spec and design but will it add profit?
Development Company
If you are looking for some awesome, knowledgeable people to work with, these are the guys I highly recommend. Their friendliness and result-driven approach are what I love about them.
Uk Builder
Down to earth, great advice and support. Really helped me get the project off the ground.
Bridging finance for development is used to build a new building or convert an existing building. This can be residential houses, shops, offices or industrial buildings. It can be for investment purposes or owner occupied. You can be an experienced developer / builder or a first-time developer: A builder by profession who has purchased land and wants a loan to build houses that he will build and sell on. The developer may or may not have built from scratch before.
The maximum you can borrow to purchase the site is anywhere between 50-60% of the purchase price depending on the project. The site would need to have full planning in place or can be agreed subject to planning.
Key Features of typical Development Loans
One can also borrow up to a 100% of the build cost provided that it is within 60% – 70% of Gross Development value (GDV) depending on the lender and experience (set on a case by case basis). Maximum term you can borrow for development finance is between 12- 36 months. Exit is usually sale of properties or refinancing.
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What Costs to Expect on a Development Finance Loan?
This is dependent on the experience of the property developer. Rates can be as low as 4% pa and they can go as high as 20% pa for say an ex-bankrupt, so the range can be anywhere in between. Also, most lenders charge an arrangement fee of between 1-2% of the loan amount. Some Lenders also charge an exit fee, although not all. This is usually a percentage of the GDV (gross development value), and around 1% to 1.25% depending on the Development Loan period, i.e. 1% of gross development value for a 12-month loan 1.25 % of GDV for an 18-month loan.
What Are the Main Development Finance Costs?
Fees, charges and general borrowing costs vary significantly from one lender to the next. The following will apply in most instances as the primary costs of development finance:
Facility fee – More commonly referred to as an arrangement fee, the facility fee is calculated as a percentage of the total cost of the loan (gross or net).
Interest rate – Interest on a development finance loan can be charged on an annual or monthly basis. Annual interest rates of 7% are not uncommon, as are monthly interest rates of 1%. Longer-term facilities attach lower rates of interest, though cost more than those that are repaid quicker.
Exit fee – Sometimes called a completion fee, the exit fee is usually calculated as a percentage of the total cost of the loan (gross or net). Some lenders charge a percentage of the total value of the completed project – not the sum borrowed.
Broker fee – Most brokers charge typically 1% to 1.75% of the total value of the loan. If a fee is charged, you will be informed of this in our initial quotation.
These are just some of the primary costs to take into account when considering development finance. Working with an independent broker will help ensure you gain access to the best possible deal to suit both your requirements and your budget.
Additional development finance costs to take into account (which may or may not be applicable) include the following:
Valuation fees – It will usually be necessary for an initial valuation to be carried out by a neutral third party, in order to assess the open market value of the security. This will also typically include a projected valuation of the completed project.
Application fees – UK Property Finance does not charge application fees. Some lenders and brokers impose fees simply for submitting an initial application, or seeking advice on development finance.
Legal fees – If it becomes necessary to hire a solicitor or seek qualified legal advice, the applicant will be responsible for meeting all such costs accordingly.
Administration fees – This is a somewhat vague term, which can apply to almost any additional cost imposed by the lender. Some brokers also charge administration fees – UK Property Finance does not.
Monitoring fees – Development finance lenders will naturally need to monitor the progress of the project, in order to ensure it is reaching its predetermined goals. This is to make sure their investment is sound, and the funds allocated are being used as agreed. All monitoring fees are picked up by the borrower.
Draw down fees – Each time a new instalment of funds is transferred to the borrower, an additional fee known as a draw down fee may apply. This could be a set fee, or charged in accordance with the size of the instalment.
Telegraphic Transfer fee (TT Fee) – This is a cost imposed by the banks handling the money transfers, which in the case of development finance can be comparatively large. Nevertheless, TT fees are generally quite small and charged at a fixed rate.
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click here to go to the UK house builders development finance calculator for an instant guide as to how much you can borrow .
Once the construction loan is approved the lender will start paying out the agreed loan. These cash payments are set against an agreed schedule known as drawdowns.
The number of draws are agreed up front between the lender and the applicant, typically the first draw would come from the applicant’s own share of the funds designated to the project.
As with all lending interest is charged on the amount of money borrowed. Typically Construction Loans are interest only loans, so you only repay the interest incurred on the loan and not the whole loan amount.
