Property Developers - Trouble with Finance?

Posted by Commercial Finance Brokers (UK) Ltd on 14th December 2022 -

We have been contacted a lot recently by property developers who, due to various circumstances are facing challenges with their current finance arrangements.  They tend to fall into three main categories: their existing lender requiring its loan to be repaid, their current facility being too expensive or, due to falling house prices, they may not want to sell the property/ies right now.   So what could the options be?

Repayment of facility

Depending on the current stage of the build, replacing the existing lender may be an option.  However, the costs involved, the potential hassle and the likely outcome need to be considered ‘before’ any steps are taken.  If the property/ies are close to being finished or even are finished, there are finance facilities available - ‘Development Exit Finance’ - to reduce the finance costs while sales complete.  This option is generally more cost effective than the actual development facility and cannot only reduce costs but also gain more time to find the right buyer/s.

Current facility is too expensive

Just as with the above ‘Repayment of facility’, a current facility that is too expensive can be tackled by a refinance option.  This can work for the right project/developer but analysis is needed before any action is taken.  The last thing any developer needs in this situation is to upset their current lender without establishing a viable alternative option.

Holding on

Maybe the developer is considering not selling all of the properties at this stage due to decreasing values or reduced local demand.  Maybe renting the properties is an option and, if so, raising the cheapest finance available on a Buy To Let mortgage is the best way forward.  These cheaper funds can then be used to repay the outstanding facility or for funding the next build project.

If any of the above resonate with you or you have other challenges, a five minute conversation with an experienced development finance broker may help.  Apart from the value of five minutes of your time it won’t cost you anything else and even the phone call is free!  Call now on 0800 999 2015 or email [email protected] – Hassle free, cost free and if we cant help we will tell you why.  If we can, we will tell you how.