100% development finance with a Joint Venture investor

Client Requirements

  • To raise 100% development finance for £1,300,000 build costs & professional fees
  • Gross Development Value (GDV) £3,200,000
  • Identify a lender that would be comfortable with 100% investor funds (no client contribution)
  • Essentially raising 100% development finance

Development Finance Experience

Our client was a highly experienced developer with a 35-year track record. They specialise in high-quality executive housing in the North London area.

The client had negotiated the purchase of a development plot for three new build houses in North London and had arranged investor funds to purchase the land outright.

Finding The Right Development Finance Broker

As a specialist development finance broker, Advias was approached to assess all development finance lenders and the development finance options.

Our task was to raise 100% of the build costs and evaluate senior debt ground-up development finance options.

Minimum Developer contribution

Most lenders will want the developer to have a minimum contribution of 10% of the total cost in the development to show commitment. This is otherwise known as “skin in the game” and as the client has sourced all the funds from an investor, they did not have any personal contribution.

Development Finance Rates - Advias Solution

We assessed either replenishing the investor funds with a day one loan or covering all the build costs.
As the risk to the lender was minimal based on the low Loan to GDV (45%) presented by the unencumbered site. As we were simply requesting 100% of build costs, we were able to negotiate desirable lending terms.

We secured terms of 3.4% over the Bank of England base rate, with an arrangement fee of 1.4% and 0% exit fee.

Moreover, the lender also allowed the client’s solicitor to act for both sides, significantly reducing the initial transaction costs.

Development Loans In London

For London property development, the land cost can be high. This can increase the cost of finance significantly compared with a comparative build outside the capital as the day one loan requirement will be higher.

As the client had sourced the investor funds to cover 100% of the purchase costs, we were left in the fortunate position of financing the construction and professional expenses.

There are various types of development finance we can arrange, see our development finance page for more information.

100% development Loan

In conclusion, the client effectively raised 100% development finance by using investor funds and bank debt and most importantly, with rock bottom development finance terms.

There are other methods to leverage a development site including Mezzanine Finance

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