Our client had bought a Grade II listed property for £950k. He had spent over £250k obtaining planning permission to build 5 houses on the land. As part of the process he had to show that the development was not profitable without the construction of the fifth house. This resulted in a low valuation estimate of £3m for the properties in the quantity surveyor’s (QS) report. However, the reality was that the end value (GDV) of the project was over £4m.
We needed to secure funding of £2m for our client to complete the build. The main issue we faced was that many banks would reference the valuations on the QS report, which would restrict the maximum loan to £1.5m.
“Our client is delighted to have secured the full funding and work is well under way on the 5 properties”
Most of the major clearing banks could not offer development terms based on a combination of the low QS valuations and the fact that they could only lend typically 60%-70% of costs.
We approached a specialist asset based bank who were willing to lend up to 70% of the GDV of the properties based on their own valuation reports. We arranged a site meeting so that they could get an in-depth understanding of the project and the client’s experience. Based on the string resale value and the client’s team, they were willing to offer the full loan.
We secured a deal for the full £2m required. The deal was charged at 5.75% over the bank base with a 2% arrangement fee. This deal was significantly cheaper than the alternative bridging finance quotes the client had obtained, which had annual rates of over 10%.
Our client is delighted to have secured the full funding and work is well under way on the 5 properties.
Specialist Mortgage Solutions Ltd
29 Park Circus