Development exit finance for London residential build

What was the situation?

I was working on behalf of a client just before lockdown who was developing seven stunning high specification residential units in Thornton Heath. The developer was almost at Practical Completion when the pandemic hit and the country went into lockdown, and he required a development finance exit deal as he was approaching the end of term with his existing lenders.

What was the issue?

I had secured four sets of terms from various lenders as well as an offer from a lender at 75% loan to value (LTV) pre-COVID. The main issue was that the COVID-19 outbreak had taken hold and all four of these lenders were no longer able to move forward at the same leverage.

Whilst looking into alternative options, I had the combined challenge of requiring the lender to use a specific valuer who had just been to the property and produced a report, and also one that was willing to fund a development that was a far higher spec than any comparable properties for sale in the area.

What was the process?

As mentioned above, I did not want to book in another valuer as many simply didn’t know where to value things in the wake of the pandemic. The reality was that the majority of lenders had pulled out of the market, and so I had to navigate a new post-COVID landscape that was constantly changing to secure the desired result for my client. In fact, some brokers had simply stopped broking as a result of lenders’ constantly shifting criteria as they found the funding market too challenging to work in.

After a considerable amount of hard work and intensive research, I was able to engage two lenders from LDN Finance’s extensive network that could work together to satisfy my client’s needs and honour the pre-COVID valuation.

What was the solution?

As such, this case became quite the COVID-19 success story. I managed to secure excellent funding from a bank on behalf of my client at a low rate to 70% LTV and then arranged a second charge to push the lending up to 75% LTV. My client was thrilled to have achieved such fantastic terms as it granted him the required funding to pay off the existing lenders for the project.

Furthermore, within two to three months of being on the market, my client had sold all of the newly developed units at levels that exceeded the valuation figures, and on some units, they sold above the marketing price. This just goes to show that if you finish your development project to the right spec for the area, where there is sufficient demand, the properties will sell despite the higher price tag even in this market. The buyers were looking to reside in Thornton Heath and so were prepared to pay a higher price to live in the best development in the area. Had my client built something similar to everything else within the market, it is likely his units would have been lost in the noise and had a much longer sales period.

Lending solutions with LDN Finance

Are you looking to secure development finance for a new or existing project? At LDN Finance, our expert brokers have a wealth of experience in securing development finance, working closely with our trusted network of private banks and specialist lenders to arrange bespoke funding solutions to suit your circumstances at competitive, market-leading rates. Get in touch with us today to organise an initial consultation.