While the UK property market is still struggling to recover from the economic crisis that had such a disastrous effect on property development, certain developers are reporting record revenues – certainly a sign that things are improving in development finance. For example, Redrow reported their highest-ever revenue for the year in 2015, with a turnover of £1.15 billion, that crossed the billion mark for the first time in 2015. The UK, however, still needs a great deal more houses, and many more office developments, so the potential for other developers to make profits in an improving climate is positive. Here is a quick overview of the practicalities involving securing property finance for a new development in the UK.
1. Begin to Discuss the Project
When you own your land outright, and you have the plans in place to develop, you need to discuss your development opportunity with a lender or a broker. Property development finance can be complex so the sooner you start to discuss your plans the better.
2. Make Sure Your Project Has Potential
Residential development finance and property development finance does not hinge on your income or your assets, but on the potential profit locked into the scheme. In order to secure finance you must calculate the costs of the project – estimated and projected until the end of the project – and assess whether the development idea is viable. A development finance broker will obviously be doing the same thing but it makes sense to be clear about the profitability of the scheme in your own mind before going further ahead.
3. Demonstrate Experience and Expertise
Since the chance of securing finance is based not on income but on the potential success of the project, you need to prove that you are the person to take this project to fruition. Demonstrate that you have a good record in development and experience in residential or commercial property development. If you don’t have a lot of experience you can help your case by getting experienced professionals on board such as builders, architects, and project managers.
4. Get Your Application Ready
You will need to prove certain assets and costs, and will have to get together a portfolio of evidence which includes the value of the property as it stands, or the purchase price, the breakdown of the costs of the project, the expected end value, a full breakdown costing, copies of the planning permissions, the detail involving any planning restrictions on the project, and the level of contingency you have. Also, you need an accurate timescale and you should put together your CV detailing your property experience, as well as the CVs of relevant professionals working with you. The more relevant information and proof you can supply, the easier the process is in deciding whether finance is likely to be granted and what kind of finance you have available to you to fund the project.