June's Property Finance Update

CASE STUDY – RESIDENTIAL INVESTMENT

A property investor and developer approached CD Property Finance for help with funding an unencumbered building consisting of three freehold flats.  The investor required funds for a further scheme but had not identified that acquisition at the time. Because of the uncertainty regarding the use of the funds and the fact that the flats were freehold there was limited interest from lenders but we were able to arrange a 57% LTV loan over 25 years at a 3.70% margin over base rate to enable the client to “hunt” for a new opportunity.

NEW JOINT VENTURE FINANCE

CD Property Finance has sourced a 100% finance scheme for residential development. The scheme must show a minimum profit on cost of 25% with a borrowing requirement of no more than £5m.  This scheme is for experienced builders and developers and is available throughout mainland UK.  Minimum loan £500k. 

This is an unrivalled opportunity for developers to kick start schemes that formerly required substantial developer cash input.

STRETCHED SENIOR DEBT

Definition – “Development Finance from a single lender comprising Senior Debt and Mezzanine Finance, which can provide up to 90% of project costs”. 

This is a valuable financing solution for developers with limited capital resources and is available for developments with a GDV from £500,000 to £100 million.  Lenders require returns on such loans of between 14% and 20% p.a depending on the risk profile.

NEXT MONTH

“Focus On The Capital” – Development Finance in London.

If you would like to discuss your property development lending requirements then please email us or call Chris on 01428 684452

Chris Dowdeswell e: chris@cdpropertyfinance.com t: 01428 684452/ 07788 591873

Property Development Finance - Market Update

Market Update - Spring 2013 The government's Funding for Lending Scheme now has over 30 participant lenders  This means that property investors can be cautiously optimistic about lower priced funding as it is our recent experience that for high quality investment deals some of these lenders are willing to apply the interest margin discounts which the scheme intended. Unfortunately, residential developers are unlikely to be looked upon favourably as all lenders perceive extra risk in this type of lending. However, there is some good news for developers. In recent months CD Property Finance has located no fewer than six good lenders that will provide "stretched senior debt". Essentially this provides developers with bank type development finance plus mezzanine, or top up, finance from a single lender.  All six of these lenders are active in the market and want deals from residential developers in the range of £500,000 to £25,000,000.  With these lenders willing to consider loans of up to 65% of GDV - in some cases 70% -  CD Property Finance is confident that this is a positive move and will increase confidence in the sector in 2013. If you would like to discuss your property development lending requirements then please email us or call Chris on 01428 684452

Chris Dowdeswell e: chris@cdpropertyfinance.com t: 01428 684452/ 07788 591873

Autumn Statement - Small Developers To Get Government Help

CD Property Finance will provide further details on this scheme when they become available. This is what is known so far.The Chancellor announced that where there are existing building sites that have stalled, a £400m Get Britain Building funding pot will enable small house builders to restart construction, helping to deliver up to 16,000 new homes on sites that already have planning permission, but have been shut down because of economic conditions.

The measure will be supported through the New Homes Bonus, which will ensure that those areas which are growing have the resources to meet the needs of their new residents and existing communities.It is intended that cash will be released by next July to get sites started.

If you would like to discuss this further then please contact Chris at CD Property Finance.

MARKET UPDATE

As we approach the middle of the year it is worth reflecting on whether the funding market has improved or whether it has stayed static like the general economy.

With base rate still at 0.50% and LIBOR at around 0.82% the borrowing costs for development projects remain relatively low. Depending on the Loan to Value (LTV) developers can borrow at rates from about 4.50%.

Admittedly, these rates apply to the lucky few that have considerable cash to input for a development deal. More typically CD Property Finance is arranging development funding at around 7% p.a for loans geared as high as 80% of cost. The lenders continue to charge significant fees, however, to boost their earnings on each deal.

For residential property investment loans the finest rate we are seeing for up to 55% LTV deals is around 4.00% p.a. However, LTV's of up to 75% are available for good residential investments. The commercial investment market is more challenging with maximum LTV's at around 65%.

New lenders have continued to emerge. Since the New Year two new authorised banks have been launched, both doing property lending as a major part of their business. Since January, CD Property Finance has had meetings with half a dozen new private funds who have money to lend either on a first or second charge basis for development projects.

To summarise, with the emergence of new lenders we would expect to find a lender for your project, provided the location is suitable and you can demonstrate the necessary expertise.

LENDER UPDATE

For short term borrowings we have a new lender that will provide finance for;

Bridging

Light Refurbishment

Heavy Refurbishment

The terms are amongst the most competitive in the market and can be summarised as:

2% arrangement fee, including broker fee

Interest rates from 0.75% per month for bridging loans and 0.90% per month for refurbishment loans

There is no exit fee and legal and valuation fees are low.

LTV range from 60% for heavy refurbishment projects to 75% for bridging finance

This product would suit:

Investors buying at auction and needing to carry out a basic refurbishment or conversion to the property

Developers acquiring larger properties which need major works. For more information please contact us.

Property Development Finance Update - May 2011

Earlier this year we advised you that the availability of property development finance had improved a little because of the entry into the market of some new lenders. This remains the case and in the section below we have shown some examples of deals that we have funded recently.

Portfolio investors have also benefited from the arrival of two new banks who can now provide loans for residential and mixed residential/commercial properties with good rental yields, up to 75% Loan to Value. This is a major improvement on a few months ago and can help those investors that wish to gear their portfolios so that they can take advantage of new opportunities.

CASE STUDIES:

Development Loan - £220,000 - single new build house in Hertfordshire. LTV 55% of GDV. Interest rate 7%.

Development Loan - £675,000 - single new build North London. LTV 50% of GDV. No formal valuation required by lender and fees were added to the loan.

Bridging Loan - £350,000 - auction purchase London. LTV 70%.

Portfolio Investment Loan - £300,000 - South Coast. LTV 55%

OTHER SERVICES

In addition to helping you with your property insurance requirements we shall shortly be able to introduce you to competitive terms for life cover and other protection products. Don't forget also to claim your capital allowances through us if you own commercial property.

For more information please contact us via chris@cdpropertyfinance.com or visit our website www.cdpropertyfinance.com

New Capital Allowance Claims Service from CD Property Finance

I would like to introduce a new professional service from CD Property Finance.

If you qualify, it could be worth tens or even hundreds of thousands of pounds to you or your company.

Unclaimed Capital Allowances

If you own certain types of property, you are entitled to claim substantial capital allowances to reduce your tax bill or, in many cases, receive a large tax refund - this would be an excellent boost to your cash flow. The only requirement is that the owner of the property should pay tax in the UK.

The types of property in question are:

1 - Commercial units in the UK with an original purchase price of £200,000 or more.

2 - UK and EEA Holiday Lets. There are some restrictions on these which we can explain to you.

HMRC does not publicise these allowances. Indeed, they will only accept submissions in a pre-approved format which comply with certain very strict rules. We work rigidly within those rules and our Principal Consultant alone has achieved almost 1,000 successful claims - with no failures!

How big is the opportunity?

It is estimated that less than 4% of valid claims have been submitted to date.

Find out free of charge

With the help of Portal Tax Claims Services you can find out free of charge whether you are entitled to any further capital allowances. There is a 96% chance you have a valid further claim. We operate a 'No Report, No Fee' service, so it will cost you nothing to find out.

Compliance

I am an agent of Portal Tax Claims who are part of the Portal Group, which includes FSA-licensed and regulated advisers. Because of its professional activities, compliance is of paramount importance meaning every claim we make for clients is comprehensively documented.

To find out how easily you could claim significant additional capital allowances, please phone me on 01428 684452 or email me at chris@cdpropertyfinance.com

Best wishes

Chris Dowdeswell

Property Development & Investment Funding Spring Market Report - March 2011

Nearly three months on from the start of the year and the banks have agreed to implement Project Merlin, the initiative to lend more to small businesses. It is hard to see how this will help beleaguered property developers, however. The major banks still have enormous numbers of problem property loans and it looks like another couple of years before they will show any appetite to lend to the smaller developer, most of whom require much higher gearing (Lending to Cost/GDV) than is on offer from the major banks. There are some new lenders that are making an impact and these are discussed below.

Investors are in a better situation. Portfolio finance is available from a number of good lenders provided there is strong interest cover. Typically up to 65% LTV can be sourced and there are lenders that offer interest only loans of up to 10 years.

New Lenders - Up to £500,000

Small developers carrying out schemes where the borrowing requirement is under £500,000 have suffered from a lack of interest from banks in recent years. This is slowly being addressed and CD Property Finance is helping developers with projects for new build houses, barn conversions and renovation projects.

Housing schemes preferred but flats considered

London and South East preferred

Arrangements fees from 2%, including CD Property Finance fee

Interest rates from 7% per annum

Exit fees likely to apply

New Lenders - Over £500,000

For schemes with a borrowing requirement of up to about £5m CD Property Finance can source finance from its usual lenders but also from new funders. The terms below will vary considerably depending on the developers' experience, the nature of the project and particularly the gearing.

Housing schemes preferred, but flats considered

London and South East preferred

Arrangement fees from 2%, including CD Property Finance fee

Interest rates from 4% over base rate

Exit fees likely to apply

Property Insurance

Don't forget to contact us if your renewal is due or if you have a new investment or development that needs to be insured. We can help even if the finance is not arranged through us!

If you would like more information please call or email us chris@cdpropertyfinance.com

Best wishes

Chris Dowdeswell
01428 684452

chris@cdpropertyfinance.com

www.cdpropertyfinance.com