Property Development Finance and Commercial Mortgage News

Autumn Statement - Small Developers To Get Government Help

2011-12-12T19:31:00.000Z

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.

2011-06-15T13:06:00.000+01:00

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

2011-05-04T13:03:00.000+01:00

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

2011-04-05T13:09:00.000+01:00

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

2011-03-23T12:46:00.000Z

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

Property Development Finanace UK Market Report - December 2010

2010-12-15T10:37:00.000Z

As the end of 2010 approaches it is worth reflecting on the changes we have seen in the funding market this year. The answer is probably "very little"!

The high street banks have hardly any appetite for property lending, especially development finance for new borrowers. At CD Property Finance we continue to see cases where RBS/NatWest have terminated funding on schemes where all logic dictates that they should continue lending to maximise their chances of being repaid. Unfortunately, they are displaying little commonsense and this has resulted in many developers losing all the funds they put into the scheme. Meanwhile, the development is part built and blighted for the foreseeable future.

On a brighter note, we are working with a dozen or so active development lenders plus numerous bridging funders and a handful of good mezzanine funders. This gives a reasonable choice for developers, but it is still hard to satisfy lenders' strict criteria. The smaller lenders have been particularly supportive over the past 12 months. We even managed to secure funding for a small developer in a seaside town to create two flats on top of an existing apartment block, the funder providing a 50% LTV facility with rolled up interest.

Blended Senior Debt and Mezzanine Funding

Working with a single bank this is an attractive option for the experienced developer. The bank provides up to 55% LTV to GDV on normal bank debt terms with up to a further 10% of GDV attracting an enhanced return of typically 20% to 25% per annum. This type of deal is available for well located developments in areas where there is an excellent demand for the product. Typically, appraisals for such schemes need to show a return on total costs of 25% or more.

Finally …

In our blogs we try to provide practical advice to our clients. For instance, earlier this year we advised developers to think very carefully which law firm to instruct on their site purchases and funding of the scheme.
In recent months we have noticed that some developers are making direct contact with a number of lenders and instructing more than one broker in regard to their funding requirements for a particular deal. This is understandable in many ways especially with the internet at everyone's disposal. The developer naturally wants to feel he is getting the best deal.

However the market for development finance is small and there are relatively few experienced brokers and willing lenders. This means that it is more often than not counter productive to put the scheme to more than one source at a time since lenders take a dim view if they see the same deal from a number of different sources. They term it as "touting" or "punting" and invariably the fact that a number of parties are looking at the deal raises the suspicion that the proposal is a "difficult" one. From our experience when this happens that deal tends to go to the bottom of the pile, and stay there.

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

Bridging and Short Term Finance for Property Development

2010-12-15T10:21:00.000Z

It will not have escaped the notice of developers and investors that there are still considerable difficulties with raising finance for property deals. The reasons are well known - the banks have neither the funds available to lend to the sector nor much desire to help.

However, in recent months it has become clear that there is a group of lenders with considerable financial resources which are available to help property developers and investors. These bridging lenders, or to use a better description, short term lenders are often backed by large funds using investor money and they are making a real impact on the market.

EXAMPLES OF USES FOR SHORT TERM FINANCE

Auction purchases - up to 70% of value.

Property acquisition where time is of the essence - up to 70% of value.

Refurbishments and conversions - on acquisition up to 70% is available.

Site acquisition - where you have a completed unsold site but are committed to buy another - finance of up to 70% can be secured on both properties.

Commercial and semi commercial purchases - up to 70% LTV.

2nd Charges - for completion of developments.

These are just a very few examples of how bridging and short term finance can help you.

Loans can be non status. Finance is available for up to 12 months and funds are made available very quickly.

We shall soon be enhancing our website with case studies and lending terms for bridging and short term finance so please look out for that but do call us if you wish to discuss how we can help you with this valuable source of funding.

Development Finance Lender Update

2010-10-21T11:55:00.000+01:00

Arguably the most serious problem in the market at present is the depressed level of mortgage lending. There are few signs of this improving and, if anything, the shortage could get worse as the FSA considers imposing tighter rules on the lenders that could spell the end of interest only mortgages.

Notwithstanding this, we continue to seek out the best deals for our clients and to locate new funding sources. In this Blog we look at:

- Two new development lenders

- Development Finance in Scotland and the North of England

Bank Finance for Developers

This bank is keen to lend on viable schemes. An exciting feature is that they will allow the developer to "drip" in their contribution to the construction costs provided the bank is happy that future cash flows are likely to be generate sufficient income to fund the developer's share of the construction costs. This means they can in some circumstances lend up to 60% of land value. Their terms are:

They lend to UK based co's, individuals and partnerships.

Houses, flats, mixed use - England only.

Minimum loan £500,000. Maximum loan £3,000,000.

Interest rate - 8% p.a minimum - can be rolled up or serviced.

Arrangement fee 1%,

Exit fee 2% of loan.

Loan To Cost- 60% of land; 60% of build.
New Small Development Lender

To add to our growing list of lenders we have sourced one that works on competitive terms based on a maximum loan of 55% to Gross Development Value. Terms are normally:

1% arrangement fee

Interest is currently around 7% to 7.50%

There is an exit fee of 1% to 1.50% of GDV

London and Home Counties only.

Development Finance in Scotland and the north of England

We are very aware that locating funding for development is probably harder here than in the south of England. However, amongst our lenders we have one that is happy to look at schemes for houses and flats in Scotland. They will lend up to £500,000 per development to a maximum of 60% of GDV.

Another lender will finance housing schemes for experienced developers in areas in the north of England where there is a strong demand to the value of £1,250,000 up to a maximum LTV of 70% (this LTV includes rolled up interest).

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

Development Finance Case Study 2010

2010-10-11T10:55:00.000+01:00

West Sussex - £500,000 residential development finance for 4 new build houses through high street bank. Client had owned the land for some years. CD Property Finance arranged 100% finance to build the houses which should sell for £250,000 each.

Surrey - £150,000 loan to finance conversion and new build of 2 flats. Client had good construction experience but no development experience. The lender completed the loan quickly as work had started on site. The flats will sell for a total of £440,000. The lender required insurance for this project and CD Property Finance was able to introduce its insurance broker to the client, resulting in the insurances being in place in time for drawdown.

If you would like any more details or advice regarding property development finance, please contact us on chris@cdpropertyfinance.com
www.cdpropertyfinance.com.

DEVELOPMENT FINANCE MARKET REPORT

2010-09-15T13:00:00.000+01:00

Following the long break we have plenty of news to share with you...

If we are to believe the media and some commentators, the coming months are going to prove difficult for the residential property market. A lack of mortgage availability is still a serious stumbling block despite continuing low interest rates. Another cloud on the horizon for both developers and house buyers is the new rules governing banks' capital requirements. The greater amount of capital the banks have to hold, the less they can lend. This could be another blow to developers and property entrepreneurs who are already being squeezed by the banks.

SPECIALIST LENDERS

The private, non bank lenders are largely unaffected by capital requirements and they have stepped in to the shoes of the high street banks who have virtually stopped lending to small property developers. These specialist lenders have a far greater understanding of development than the average bank. For this reason alone they can be recommended. They also have quick decision making processes which is refreshing given the months that many deals now take to complete through the big banks. Interest rates typically start at 1% per month and most funders are willing to lend up to 50% of Gross Development Value.

One small bank has made a promising debut, lending to SME developers. Of particular benefit is that they allow the developer to provide their contribution to building costs "on the drip". They lend 60% of land and 60% of building costs provided you can show that you have future cash flows that will be sufficient to make your 40% contribution to the building costs. The effect of this is to give you a higher LTV on the land loan.

We have a number of such lenders through whom we can source development finance, and we would be pleased to introduce your scheme to them.

SOLICITORS

It is tough enough to achieve a development finance loan offer these days but the pain can be further exacerbated by long delays in completing development loans. At CD Property Finance we have experienced this on a number of occasions. A period of 6 months to complete a loan is unusual but not unheard of.

One of the main causes of delay can be the lack of experience of the borrower's solicitor. It is imperative that any serious developer should instruct a lawyer who has considerable experience of the complexities of development funding. For this reason, unless your solicitor is highly competent in all aspects of property transactions we recommend that you seek the advice of CD Property Finance on who should act for you. We may well suggest using one of the lending bank's panel solicitors since they will be fully conversant with the lender's requirements. We can assure you that this will go a long way to avoid you losing the development opportunity and can in the long run save on legal costs.

Please feel free to discuss this with us.

PROPERTY INSURANCE, INCLUDING CONTRACTORS' ALL RISKS COVER

All property lenders insist on Contractors' All Risks cover for your project in addition to your compulsory insurances If you do not already have adequate insurance then, again, this can be the cause of long delays in loan completions.

CD Property Finance is happy to help you with all your general insurance requirements through our close relationship with one of the country's leading insurance brokers. Our experience is that they provide an excellent service and can place the most difficult risks, for example, where a project has already been started but no insurance is held.

LTD COMPANY BUY TO LET

We can arrange Ltd Company Buy to Let finance for both houses and flats. Maximum LTV is 75% for houses and 50% for flats. Rates start at 4.24% per annum.

Please contact us for more details.

Email: Chris@cdpropertyfinance.com

web: www.cdpropertyfiance.com

Summer Property Development Finance Update

2010-07-14T13:34:00.000+01:00

It's been a busy time in the property finance world in the past few weeks, but there is a distinct imbalance in the market. Prime commercial and residential property are still selling well and funding is available for investments and for development in these areas. However, the secondary market in both sectors is struggling because of a lack of lenders willing to finance any property project carrying what they perceive to be undue risk. In the case of commercial property this may be because the property is let on short leases or where there are break clauses. For residential, there could be a multitude of reasons ranging from location to property type. Flats/apartments are still not popular even with the most active lenders.

As you will see below, we are finding that RBS Group is shying away from any new property projects presented to them for clients new to the bank and is reluctant to help existing borrowers. However, other banks are beginning to step in, cautiously.

I am also pleased to announce our tie up with one of Europe's largest independent commercial insurance brokers. They have the resources to help you make considerable savings on your property and related insurances.

DEVELOPMENT FUNDING

As you may know, CD Property Finance specialises in arranging residential development finance for its clients. Many of you will have facilities with the RBS Group and may be finding that they are reluctant to lend. RBS have generally been very supportive of developers in the past and we have an excellent relationship with the bank but unfortunately they now have to reduce their substantial property loan book. This means that they are very unlikely to take on new clients. For existing clients the picture is not good either and we are already seeing many enquiries from good borrowers who are being told by the bank that they must either reduce or repay borrowings.

We are here to help you. We have long established relationships with all the key lenders and direct lines into their property finance teams. This enables us to solve clients' funding problems. We do not pretend that development finance is freely available but if your scheme meets certain criteria we can probably help. Remember, housing is favoured and the bank will always want to provide enough finance to cover 100% of construction costs and interest. This often means that little can be advanced to buy the land so please bear this in mind.

If you have a project and it needs financing please do contact us.

GENERAL INSURANCE

Our new partner can arrange insurances for

Property Developers - Contractors' All Risks cover; buildings cover; liability insurance

Property owners and investors - Buildings cover; liability insurance.

Here is one example of a current offer:

Our insurance partner is offering great terms to SMEs that meet standard underwriting criteria and have been in business for 3 years or more and have had no claims for 3 years.

For businesses that meet these criteria, and are eligible for their Retailers & Office Policies they will give you a quote of 5% less than your current insurer’s premium.

We will soon have offers for discounted insurance for property developers and will advise you immediately of them. However, if your renewal is due shortly let us know and we will arrange for a quote.

Investment Opportunity

2010-05-19T11:30:00.000+01:00

We are constantly looking at ways to help our property development clients, and to provide opportunities for our introducers.

For property development clients we are actively looking to bring investors to your schemes.

If you are an introducer, you and your clients are probably tired of achieving poor returns on money invested. In property development there are opportunities for sophisticated investors and high net worth individuals to achieve enhanced returns.

By way of background, by 2007 it became common for banks to lend up to 85% of the costs of a development project. Since the banking crisis there are not only far fewer property lenders, but those banks that are still lending have amended their criteria and now limit their lending to 60% to 70% of development costs. This means that there is a huge funding gap for most development schemes. This funding gap can be filled by investors.

CD Property Finance offers opportunities for investment funds, companies and high net worth individuals to invest in property projects.

Our property developer clients have the experience to identify profitable sites and CD Property Finance can arrange the development finance form the banks for such projects. However, it is often the case that schemes need some investor finance to ensure that it is adequately funded.

EQUITY FINANCE

We are always looking for equity partners for our clients. Projects to be funded include family housing developments, refurbishments, barn conversions and apartment schemes.

We can arrange development finance from a bank to around 70% of cost and equity partners are sought for the 30% balance of costs. The profits from the completed development are normally spilt on a 50/50 basis between the developer and the investor. The scheme can either be financed through a new company or the main development company, with an agreement setting out the joint venture terms.

MEZZANINE FINANCE
Often the developer client has some capital to put towards the project cost, but not enough to satisfy the bank's requirements. Typically a bank will lend 70% of costs and the gap can be financed, for instance 15% by the developer and 15% by a mezzanine lender.

If you are interested in becoming an investor or require finance, please contact Chris at CD Property Finance on 01428 684452.

CD Property Finance in this months edition of Housebuilder Magazine

2010-03-10T11:12:00.000Z

Extracts from Housebuilder magazine 'Lending a Hand' - March 2010

Few involved in the funding game expect a wholesale return to the residential market from the big institutions in the short-term. Chris Dowdeswell, principal of CD Property Finance, another brokerage specialising in residential funding, says: “2010 is unlikely to see the high street banks returning to property development lending in any significant way. This is because the banks have extremely high property lending exposures and development finance is regarded as very high risk.”

“The lenders currently prefer family housing schemes, in traditionally popular areas, as opposed to apartments. Over the past 12 months, [we’ve] arranged funding for over a dozen such schemes with a variety of lenders,” says Dowdeswell.

With apartment projects, the lending criteria is, however, far more stringent to reduce risk. Chris Dowdeswell explains: “It’s possible to finance apartment schemes of up to about ten units but whereas bank finance of up to 60% of gross development value is available for houses, only 50% of GDV is available for apartments.”

What most developers want to know, apart from whether the housing market will recover is also whether the funding market will get easier going forward and Chris Dowdeswell is reasonably positive: “I would expect to see one or two more lenders gradually dip their toes back in the water towards the end of 2010 provided property sales and values hold steady during the year.” For most in the industry, that is a reasonable ambition.

For more information please contact Chris on chris@cdpropertyfinance.com
http://www.cdpropertyfinance.com/

The return of Mezzanine finance for property developers

2009-12-16T13:06:00.000Z

We know developers are finding that the banks have reduced senior debt levels to 50% to 55% of GDV thus requiring more cash from the developer. This increased cash requirement often means that a good scheme cannot be started. To help solve this problem we have made arrangements with half a dozen mezzanine finance providers (or "top up" lenders) who between them can cover a wide spectrum of developments and finance needs. Under the section OUR FUNDERS we show you how this might help you to prosper in 2010.

Our Funders

1 - £50,000 - £100,000 - These lenders prefer to put finance into projects at the outset but can also assist should cash become short during the course of a scheme e.g if the bank lender does not honour its original agreement to finance all the build costs. This does not mean that these lenders will lend on problem schemes and there must still be a very healthy profit in the development once it is completed. Sites in the south of England are preferred.

2 - £100,0000 - £500,000 - These mezzanine lenders prefer to finance developments from the outset. They will only lend on housing schemes and prefer to finance schemes in the south of England

3 - £500,000 - £3,000,000 - There is a good deal of flexibility where larger loans are needed. Some of our funders prefer family housing whereas others will put funding into high value single units in top quality locations across the country and will also consider lending on apartment schemes.

The common denominator for all the lenders is that the developer must have good experience and the scheme must have strong viability. Most of these lenders will need some cash contribution from the developer.
.

We wish you a happy and relaxing time over the Christmas break and hope to work with you in 2010.

Best wishes,

Chris

CD Property Finance

http://www.cdpropertyfinance.com/

Benefits of using a broker to arrange property development finance.

2009-11-26T12:32:00.000Z

1. Benefits of using CD Property Finance as your broker.

In these uncertain times for property developers there really is only one certainty - it will not be straghtforward raising the finance for your development! We all know the reasons for this - the banks overstretched themselves and are now clamping down hard on the property sector.

However, do not despair. As a broker with over 25 years in property development finance Chris Dowdeswell of CD Property Finance has retained very close relationships with the banks and investors that really count. This means that Chris can still source attractive finance packages on competitive terms. If you instruct CD Property Finance to work on your behalf you will benefit from:

1 - Our market knowledge of which banks are lending and on what types of projects, and where.
2 - Access to other funding sources, such as cash rich investors.
3 - Preferential rates - we negotiate hard for our clients!
4 - Our knowledge gained over 25 years of what information lenders need to be presented with and how it should be presented. CD Property Finance thus gives you a head start over other developers and helps you jump the queue for the banks' attention (and their money!).
5- Personal service from Chris Dowdeswell A.C.I.B

2. Hampshire case study

In June a high street bank business manager known to Chris Dowdeswell for 10 years called us to say that they had been asked to lend an experienced developer about £100,000 to finsh off the construction of two small houses in Hampshire. The bank - one of the ones we all now have shares in! - told us that their credit department had refused to lend even though the £100,000 loan represented only 30% of the value of the completed houses. Could CD Property Finance help?

We immediately knew that we could and arranged to meet the client within a couple of days. We gathered all the information we knew our lender would need and presented it to them straight away. The lender met the developer within a few days and offered all the money they needed to complete the two houses. The developer was able to draw down his funds within four weeks of meeting the lender.

Our developer client was extremely grateful for our service and advised us that if CD Property Finance had not been able help he would have had to close the site down and lose much of his own money.

3. West Sussex case study

A valued client obtained an option to buy a site in West Sussex. He was able to achieve a planning consent for 3 detached houses and approached Chris Dowdeswell for a loan of £1,000,000 to develop the site. Despite the difficult prevailing conditions we were able to arrange the loan with a bank whose senior director we had known for over 20 years.

This strong relationship led to the bank lending 82% of the total cost of the development - an unusually high percentage in the current economic climate - with the bank taking a small share of the profits of the scheme.

4. What are the different finance types?

Development finance may appear quite complex but the elements can be simply be broken down depending on the loan structure required by the client. The most commonly used are:

Bank finance (see below) + Developer cash = 100% cost

Bank finance + Mezzanine finance (see below) + Developer cash = 100% of cost

Equity finance (see below) = 100% of cost

5. DEFINITIONS

Bank finance - usually around 65% of the cost of the project, secured by a first charge over the development site.

Mezzanine finance - usually about 20% of the cost of the project secured by a second charge over the site

Equity finance - 100% of project cost, often in the form of a joint venture between the developer and the investor. Profits are usually split 50/50.

For further information, please contact chris at chris@cdpropertyfinance.com or visit our website www.cdpropertyfinance.com

Property Development - Oven ready development projects available

2009-11-04T10:29:00.000Z

Perhaps it is a sign of improving times in the property market that we are now able to offer to our clients a very exciting new opportunity to establish or grow your business through refurbishing and developing residential property.

CD Property Finance has teamed up with a former Development Director of a major house builder who can offer profitable small developments to suitable applicants in a variety of locations around the UK.

The main features of this scheme are set out below:

Primarily single unit refurbishment and development schemes using Permitted Development Rights so that planning consent is not required.

Maximum Gross Development Value of £500,000

Up to 100% development funding available - client must have clean credit history.

Up to 75% funding through buy to let on completion of project, if required

Each project to show minimum of 25% profit based on Gross Development Value.

It is not essential that the client should have direct experience of the construction industry

Our partner provides a full service right from the start and this only concludes with the sale or refinance of the developed property. The service includes:

1 - Property finding and appraisal

2 - Arrangement of funding

3 - Architectural design

4 - Quantity surveying and project management

5 - Assistance with sales and marketing

Chris
www.cdpropertyfinance.com

Property Development Finance Autumn Update

2009-10-05T14:57:00.000+01:00

It is 12 months now since the collapse of the banking system. This time last year the economies of the G20 countries were on the brink of meltdown. Thankfully, the crisis was addressed and 12 months on there are positive signs emerging that we may be over the worst.

Property and funding markets remain severely affected, however. Property development finance and commercial mortgages in the UK are being rationed as the UK banks that have emerged in one piece try to reduce their exposure to property without turning off the tap altogether. Foreign banks have practically disappeared from the property development finance arena but some are still active in the commercial property investment sector.

This means that the banks that are lending are being highly selective over who they will lend to and on what projects. It is the prime sector that has driven the recent increases in transactions and values. Banks will focus on deals for prime schemes for the forseeable future because they cannot afford to risk further substantial losses from property lending.

With only a handful of banks doing any serious lending. new funders are emerging. These include family owned enterprises that have accumulated wealth over the years and understand property risks and rewards. There are also some new funds from overseas looking to lend into the UK property market as they see good returns, particularly from mezzanine finance and equity.

We expect this trend to continue, but with all funders chasing the same small pot of prime borrowers and schemes.

Property Development Finance UK - R.I.P?

2009-08-19T09:51:00.000+01:00

There is a crisis in property development finance in the UK.

Property developers and house builders are being starved of cash by the major banks and this means that the UK population is being starved of new homes.

Even the most experienced and best connected property finance brokers are struggling to place deals which 18 months ago a number of banks would have been competing for. We are not talking about highly speculative schemes for inexperienced operators but very profitable, well located developments that experienced developers can put cash into.

Still the banks won't lend, because they have branded all forms of development as "very high risk" without actually looking at the individual profile of the deal. This is in complete contrast to their attitude before 2008 of barely assessing risk before lending, just because another bank was in the background competing for the business.

To illustrate the point, only one of the major high street banks will consider funding developments for new customers and even they have decided that they will not fund ANY developments of flats/apartments anywhere. How extraordinary is that, and what an indictment of the mess the banks have got themselves into.

There are a few smaller banks still lending, and thank heavens for them. They are doing their best but of course are overwhelmed by enquiries which is leading to log jams and long delays for approvals and drawdowns.

The picture for commercial mortgages is not too different. The banks will find every reason not to lend rather than approach a proposition with an open mind.

All this would indicate that there is a huge opportunity for new banks to come in to property lending in the UK and to write excellent, low risk, high reward business at a time when there are signs of improvement in the property market and the economy as a whole.

When Will UK PLC Emerge From Recession?

2009-08-13T17:55:00.000+01:00

The news today that France and Germany recorded growth in their economies in the last quarter should be good news for the UK.

However, it should also embarrass our banks.

A chronic shortage of credit in the UK is causing our economy to remain fragile and in recession. Those responsible for this lack of credit are primarily the High Street Banks - Barclays, Lloyds, RBS and HSBC. It is their over cautious and negative lending policies that are putting thousands of businesses under every month. The banks have forgotten that they owe their very existence to these people that run these businesses and who they are making suffer so cruelly.

Something that the French and German banks have not forgotten.

UK business will not forget this harsh treatment by the banks they depend on to create the economic growth so badly needed.

Property Development Finance Case Study

2009-08-12T12:22:00.000+01:00

Our developer client had identified a site and agreed a loan facilty with his bank. The basis of this facility was that the developer would put in all his funds first, with the bank then providing their share. The client bought the site with his own funds and started building. Once he had injected all his funds he approached his bank again to activate the agreed facility to complete the development. At that stage the bank refused the request, as their policy had changed. This left the developer in a desperate situation with a part completed site with no prospect of finishing the work through no fault of his own. No other high street bank was interested in helping him.

Fortunately, the client was referred to CD Property Finance and we quickly identified that the situation was retrievable. We introduced the client to a specialist property lender who could see that there was little risk in lending to complete the project as the site was free of charge and the ultimate LTV (Loan to Gross Development Value) was likely to be at a level of well under 50%. The lender very quickly provided the necessary funds and the developer is now bringing the scheme to a successful conclusion.

For more information contact Chris at CD Property Finance.
Email: chris@cdpropertyfinance.com
website: www.cdpropertyfinance.com

Money Saving Insurance For Property Owners

2009-07-20T10:14:00.000+01:00

CD Property Finance is now an Introducer Appointed Representative for Business Money Insurance Services. This means that all our clients, whether property developers, investors or business owners, can now enjoy great insurance rates and top quality service from the experienced and helpful team at BMIS.

BMIS has a great general insurance product range and provides cover that is typically 10% to 15% cheaper than others without sacrificing the comfort of using high quality insurance names.

Working with BMIS, we can provide business insurance cover; liability insurance and contractors' all risks insurance; property insurance; commercial motor insurance; plant insurance and personal insurance.

All you need to do to benefit from this service is to either contact Chris Dowdeswell at chris@cdpropertyfinance.com or go online at http://www.bm-is.co.uk/ and quote PROMOTIONAL DISCOUNT CODE: BMIS1017.

Try it and see how much you can save!

Property Development Finance for part completed schemes

2009-07-15T12:14:00.001+01:00

We have some good news for our beleagured developer clients:
Do you need?
1 - Finance for Part Completed Schemes.
OR
2 - 100% Finance.
OR
3 - Mezzanine Funding
We have been inundated with enquiries in recent weeks from house builders that find dealing with their bank a thoroughly depressing experience. Existing bank clients are still having their loans called in and new ones are met with a quick refusal or, even worse, a long, slow NO. If this is happening to you, we are here to help and there may be a little light at the end of the tunnel.

Best Wishes,

Chris
chris@cdpropertyfinance.com
www.cdpropertyfinance.com

100% Development Finance - Alive and Well

2009-06-23T11:06:00.000+01:00

Just when we all thought that the days of 100% development finance were over for good, CD Property Finance has located a funder that has the appetite to lend to developers that have got a great scheme but no cash.

There are restrictions, of course. No flats, for instance. Maximum loan £1.25m. Maximum number of houses is five, and these must all be "family" homes and not very high end luxury houses. The lender will fund schemes in England and Wales only.

This is a great opportunity for experienced developers to get a scheme started that would otherwise remain dormant.

CD Property Finance welcomes your enquiries.

All the best

Chris Dowdeswell

CD Property Finance

VAT - PITFALLS FOR HOUSE BUILDERS

2009-06-03T11:33:00.000+01:00

We have linked up with Wilkins Kennedy, Chartered Accountants for this important advice for house builders:

CAN’T SELL A NEW-BUILD HOUSE? TAKE CARE BEFORE YOU RENT IT OUT

If you are a house builder having trouble selling a new home you might, quite logically, be tempted to rent it out until house prices pick up again.

However, under HMRC regulations, you might be letting yourself in for some complex potential VAT problems.

Due to the current slowdown in the residential property market, some house builders are deferring their intended sales of dwellings and temporarily letting instead, and so becoming partly exempt.

As you are probably aware, if a new house is sold freehold or on a long lease (over 21 years in England; 20 years in Scotland) you can reclaim all of the VAT incurred on your building costs.

However, for short leases or lettings, HMRC can insist on a claw-back of some of the VAT incurred on building and development costs.

Put simply, the reason for this is that VAT on freehold sales is rated as zero, so you can recover all the VAT, whereas short lettings of new property are VAT exempt – so you have no right of VAT recovery.

How to check your position
For many house builders the amount of ‘exempt input tax’ related to their temporary lets is small (known as ‘de minimis’) and as a result they can continue to recover all of their input tax; but they must check to avoid VAT mistakes.

If you are in a large building firm you may already be partly exempt and familiar with operating a partial exemption method. However smaller building firms may not be so aware of the intricacies surrounding the whole area.

The ‘de minimis’ is a simple check which is based on the expected time period you will letting your building as a proportion of the economic life of that building, which for VAT purposes is ten years.

How de minimis works
Your exempt input tax is determined by applying the proportion to your total input tax. Provided your exempt input tax does not exceed £625 per month on average (up to £7,500 per year) and is not more than half of your total input tax, then your exempt input tax is ‘de minimis’ and you can recover it in full. What’s more, the ‘de minimis’ test applies to the total input tax incurred - including for example any input tax on general overheads such as bookkeeping costs.

However, if your building or buildings do not qualify for de minimis exemptions, you will almost certainly have to do one or more of the following:

* adjust the VAT previously recovered on your submitted VAT returns
* restrict the VAT to be recovered on your current and future VAT returns
* both adjust your past VAT recovery and restrict your future VAT recovery.

So, for example…
Let’s assume you have recovered £20,000 input tax on a house that you originally expected to sell for £300,000. Because of market conditions, at the end of the tax year you decide to defer the sale by letting for two years and so become partly exempt. A simple check for de minimis is:

£20,000 input tax x 2 year lease divided by a 10 year expected economic life of the building (the standard) = £4,000 exempt input tax

The £4,000 of exempt input tax is de minimis because over the tax year it does not exceed £7,500 or 50 per cent of your total input tax. So there is no need to adjust the VAT previously recovered on your VAT returns. If the input tax was incurred over more than one tax year, the de minimis test should be applied to the input tax incurred in each of the tax years separately.

A word of warning
The starting point for the repayment of VAT when you rent a house is the moment you decide to rent it – not when you sign leases – so you could be liable to VAT even though there is no rental yet coming in.

It’s well worth seeking advice
Naturally this article is only an outline of the VAT situation on letting new houses. If you are not familiar with all the complex issues that lie behind the legislation, simply call Bob Southey on 01483 306318 quoting CD Property Finance.

Commercial Finance Newsletter

2009-05-20T11:13:00.000+01:00

Just to let you all know our latest Commercial Finance Newsletter was published last week. In this edition we offer advice on how to structure your business plan and give you a summary of the current lending available from UK banks.

If you would like to sign up to our monthly newsletter, please contact us by emailing newsletter@cdpropertyfinance.com. (We won't pass your details on to any third parties, it's only for use by CD Property Finance for the distribution of our newsletter).

We have also had two articles published on www.articlesbase.com:

- UK Residential Property Development Market View
- Summary of current UK bank lending for businesses

If you have ideas of articles you would find useful, please do let us know.

Housebuilder Article - Cash Barriers

2009-05-13T12:43:00.000+01:00

We are pleased to announce that Chris Dowdeswell of CD Property Finance features prominently in the latest (May 2009) edition of the Housebuilder. This is the official journal of the National House Builders Council who provide the vast majority of new build home warranties.

In the article 'Cash Barriers', Suzie Mayes considers the type of lending now available to developers. She finds from speaking to people like Chris Dowdeswell that while there has been some improvements, getting finance is still a very tough task.

Chris provided comments for use throughout the article. Here's a quick snippet of these words of wisdom:

"If a developer owns their own site with little debt against it, there is a good chance of securing funding because the LTV will then be typically below 55% of gross development value (GDV) which is often acceptable by lenders" Chris Dowdeswell, principal, CD Property Finance.

"If we can see prices stabilise in the next three months, there may actually be some light at the end of the tunnel" Chris Dowdeswell, principal, CD Property Finance.

You can find the full article in this months Housebuilder magazine on pages 46- 49. We would love to hear your comments.

UK Property Market View

2009-05-06T10:46:00.000+01:00

There are rumours of greater buyer activity in the residential market but I am sure you will agree that the messages are very mixed. Some developments seem to be selling reasonably well whereas others, for whatever reason, have hardly seen a viewing for months. Our view is that we are in classic early/mid recession "one step forward, two steps back" mode.

This is what happened in the last recession. In spring 1991 everyone was expecting a significant upturn but it was not for another 18 months that the true recovery started. This followed a prolonged period of lower interest rates. Let's hope that the promised increase in new mortgage lending transpires and that one or two more development funders emerge. These two factors should drive the market towards normality again. In this newsletter we have a piece on VAT that is important for developers that are holding completed properties until the upturn.

We also have the excellent news of an established lender returning to the market and who will consider lending on profitable small schemes. As always, your feedback and loan enquiries are most welcome.

Regards,

Chris
www.cdpropertyfinance.com

First Blog from CD Property Finance

2009-04-22T13:15:00.000+01:00

This is our first blog at CD Property Finance. We will be posting articles and comments on relevant news stories concerning property development finance and commercial mortgages.

We hope this will be of interest and we look forward to hearing you questions and comments.

Chris Dowdeswell.
www.cdpropertyfinance.com