Providing Developers with an exit!
While there is a constant reminder that there is a shortage of affordable housing in London and the South East, it seems that the specialist finance industry has done a meaningful amount to address this. We are aware that it is the small and medium sized businesses that effectively contribute and drive the UK market, and it is clear to say that no one has supported the small businesses more than the development industry over the recent years.
It is felt that there is an element of funding that could help to further assist developers- that element is the development exit funding. Development exit loans can be written out once a developed property has all its building regulation sign offs, new build insurance warranty, and confirmations that all planning conditions have been met. At this stage, the properties are available for sale- and the risk of the proposal is deemed to have dropped dramatically.
The majority of development funding solutions available in the market currently do allow some period of time for the sale of the newly developed properties. However the interest rates will typically be charged at relatively high rates in order to compensate for the build risk. Obviously there is a reason for this high level of pricing. Development funders can charge a premium for their funds, given that the property development is a riskier proposition than for example a simple bridging loan.
There are development lenders that are currently providing exit projects at cheap funding levels to allow borrowers an extended period to market their properties. The development exit proposals rates start from 65% LTV at 0.65% PCM (no exit fees) If you would like any more information on the above then please feel free to contact Yorkshire Development Finance today.