What was the situation?
A developer had exchanged on some land with a deferred completion. The intention was to secure planning permission and then shortly after complete with development finance. The plan was to demolish the existing building and build four houses. Planning was declined for four houses and now approved for three houses.
Gross Development Value (GDV): £3.9 million
Funding agreed to 70% GDV for the development facility
What was the issue?
Planning was declined, but we had already exchanged.
What was the process?
We had to complete on the purchase to avoid losing the deposit paid on exchange and then rework the planning permission giving the comments from the planning officer.
What was the solution?
The development finance lender was a family office who was flexible and charged normal development finance rates for a pre-planning acquisition loan. Once planning was approved this was then converted to a development loan. The major benefits were:
- Low interest rate;
- No additional valuation;
- No additional legal fees;
- Arrangement fee was only charged on the additional loan and therefore not charged twice on the land loan as long as the development facility was deployed within six months.