Top advice on development finance and funding of building projects in 2010

2009 has been a very difficult year for property developers and all those associated with the industry. In the very early part of the year there was an almost complete absence of development funding but now there are a relatively small number of banks willing to finance good schemes.

A feature of the market has been that, whereas up until late 2008 it was possible to raise up to 65% to 70% of Gross Development Value on a senior debt basis (1st charge bank finance) the banks have reduced this to 50% to 55% LTV. Any borrowing above this level will be charged at mezzanine funding rates. Interest margins have increased, indeed, doubled and trebled in some cases. Apartments remain unpopular with lenders, but good schemes can be financed.

2010 looks like being very similar to the last six months of 2009, perhaps with one or two more lenders dipping their toes back in. However, we do not expect LTV's or interest margins to improve.

Bearing the above in mind we anticipate our role as specialist development finance brokers remaining very important to developers and we look forward very much to working with you in 2010.

Case Studies

We thought it would be informative to explain briefly to Builderbusiness members some of the development transactions CDPF have financed in the last few months.

£200,000 loan at 55% LTV (Loan To Value) - single bungalow - West Sussex

£315,000 loan at 50% LTV - pair of semis - Surrey

£723,000 loan at 55% LTV - 6 houses - Dorset

£1,022,500 loan at 61% LTV, including some mezzanine funding - 3 houses - West Sussex 

CDPF also have a number of deals in the pipeline including senior debt and mezzanine funding for schemes in Surrey and West Sussex, and for flats in south London.

Member price: Free business consultation plus save 10% on finance arrangement fees!