Key Strategies for Securing Property Development Finance in Today's Market

Introduction

Securing property development finance can be a tricky process, especially for a first time developer. This article will discuss the key strategies to consider when applying for property development finance. 

property development finance

How does development finance work? 

Development finance is a crucial tool in today’s property market as it enables developers the funds they need in order to produce stock. While the development finance landscape can be complex and difficult to navigate, there are several important concepts to understand. Firstly, developers should understand the purpose of their project, be it commercial or residential, as this will dictate the lenders and products available to them. Once this has been decided, developers will need to gather an array of in-depth documents and information on their proposed project. This will require the input of various professionals, including: 

Architect - To design the development and oversee the planning and construction of the project. 

Contractors - Contractors are vital in the construction of the project, but can also offer valuable insight during the design phase, ensuring the plans are feasible. 

Brokers - Mortgage brokers are vital in ensuring that the developer has access to the right finance from the right lenders. Likewise, property brokers can ensure that the developer is able to sell the finished development at the desired price. 

Planning consultants - To ensure that the development falls within the regulations of the local authority. 

Solicitors - To ensure that the correct legal processes are followed in the purchase/sale of the property and the acquisition of development finance. 

Tips to securing development finance:

Find the right property: 

Finding the right property is an important step towards the acquisition of development finance. Given the fact that the lender will take security over the property, they will want to ensure that the property is suitable for both the proposed development and as sufficient security. .

Complete the application: the development finance application will need to be completed by the borrower and is likely to include an in-depth analysis of the development itself. During the application process, the lender will evaluate the development to ensure that it is sufficiently planned and likely to succeed. During the application it is vital for the borrower to ensure that they have provided all the relevant documentation to the lender, as failure to do so will result in an unsuccessful application, or delays. 

Ensure your contribution: 

Lenders will also evaluate the borrower's contribution to the scheme, be this through their own cash contribution or through the purchase of the property. Lenders will look at the developers contribution as a way of ensuring they have “skin in the game”, without adequate contribution, it is unlikely that a lender will take on the risk. 

Work with the right broker: 

Working with the right broker is another important factor to consider. By working with the right broker, developers can ensure that they have access to the best development finance products from the best lenders in the market. The cost and availability of finance can often be the difference between a successful project and an unsuccessful one. 

Conclusion

In conclusion, development finance is a crucial tool, enabling developers the funding they need in order to take advantage of development opportunities in the market. Considering the importance of development finance, developers should consult with a professional development finance broker prior to embarking on their development journey.

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