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The Benefits Of Build To Let Development Finance

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If you are a residential or commercial property developer in the UK, then finding the right finance for your project is essential. While some developers look to build and flip for a profit, other developers and professional landlords look to create a long-term return with regular ongoing revenues generated from letting the property. In this instance, specialist build to let finance is often required.

Failure to choose the right development finance can not only result in running short of the funds to complete the project but reduce the portion of rent that becomes income.

What Is Build To Let?

Build to let development finance is a specialist product that is available for projects that include three or more units. These units may be houses, apartments, and flats, covering new builds, conversions, and refurbishments.

The three main types of built to let finance include:

  • Residential finance – can be used for developing flats, student dorms, or a House in Multiple Occupation (HMO)
  • Commercial finance – can be used to find the development of offices spaces, rental factory floors, and storage space
  • Mixed-use finance – can be used to fund semi-commercial properties, such as partial rentals

The property developer or landlord should have an exit strategy in place. Unlike standard development finance, where the sale is the exit strategy, the build to let exit strategy is dependent on the property being let and generating rental income. Usually, the property developer or investor will move to either a standard or commercial buy-to-let mortgage, depending on the number of units and if there are shared facilities.

The build to let loan is 100% secured on the development property. To secure the funds, planning permission should already be in place. Furthermore, a rental and sales valuation is required.

The Advantage Of Build To Let Property Development Finance

Due to the exit strategy being dependent on renting the properties, standard development finance may not be sufficient in the letting landscape with a loan period of 12 or 18 months. Build to let finance offers the solution developers, and landlords need by offering longer loan terms. This additional time accommodates for the fact that the exit strategy may take longer to materialise.

The core advantages of build to let finance includes:

  • Flexible loan terms
  • Take on more extensive or multiple projects and increase potential profit
  • Lending up to 60%, including interest, open market value, or 75% restricted investment value
  • Loans from £1m to £10m

There are few lenders that specialise in build to let finance. If you are looking for build to let property development finance, please contact BLG to find out about our lending criteria, prices, and how we can help you get your project off the ground.

WHAT OUR CUSTOMERS SAY ABOUT US

"A challenging site like no other with every inch of the plot being built on and 12 apartments built-out through a driveway 2.5m wide off of a main high street with limited access rights, not to mention all the complexities associated with 13 Party Wall Agreements. Most lenders would not have had the vision for the scheme or the confidence in Spiller Builders to build out the scheme.  I just wanted to say how helpful the entire BLG team have been during the build. A very approachable and knowledgeable team, with a “can do” approach to lending. We will be looking to do more business with you for sure."

“We have used BLG for development finance for over 8 years. During that time we have found their knowledge and expertise in the property development industry to be second to none. Their loan process, pragmatic and flexible approach to lending and flexibility when required has supported our business needs throughout the period and provided us with support to deliver new homes in Bristol and the surrounding areas.”

“As property developers you never know the curve balls that you may get and a project that is great on paper may prove a bit more tricky.  This happened to us on a project that BLG have funded and throughout they have supported us.  Our business likes to be collaborative and when we hit those tough moments it really felt like we were working as a team with BLG.  If you have a decent project you can get it funded, but what you really need is a business that is there to support and advise you as well.  For us on this project it was BLG.”

“I approached BLG Development finance with an opportunity I had in Chesham, Buckinghamshire, to build 5 new build houses in 2021. My main contact was Anil Bains who is a Director covering Asset Management. Within very quick timescales, BLG provided me with indicative quotes in regards the finance levels they could offer me. Having considered those levels, I requested a valuation to be carried out which again was dealt with swiftly. We proceeded to completion. The build went very smoothly with monthly monitoring being carried out by BLG and monthly drawdown requests dealt with in a very timely manner. Due to a difficult time generally in the market in regards selling, I was in need of a six-month extension to the loan which again was appraised very quickly and granted. Having dealt with numerous funders over the last 20 years, I can only speak highly of my personal experience with BLG and would very confidently work with them again on any future projects. “

"From our side it has also been a pleasure working with BLG and the team there. We have found you easy to deal with, proactive in resolving any minor issues that have arisen through the project and shown great flexibility in working with us as a partner. We will certainly like to work with you on future partners."

“I really appreciate your hard work. We really like the way you communicate & I must say I haven't seen many people who are that approachable.”

“A very efficient processing team, dealing with the DD once deal credit approved, through to completion”

“Many thanks for your efforts on this one and getting it approved and sorted so swiftly, very much appreciated. I am sure I will be speaking to your over the coming months.”

“We had other funding options, but chose to use BLG again, as we work well with the team, who always provide very clear information and advice with a friendly approach throughout the funding process. Very efficient and always very helpful.”

“Many thanks Anil, it’s been a real pleasure working with BLG so far.  We’re lining up the next project too”

“We would recommend all staff we have dealt with at BLG, as we are very satisfied with the team and the initial offer/terms presented, then you and the funding team, through to the draw down team at valuation stage.”

“All documents are clear and the way you keep clients informed, all the way along the funding process, is refreshing for us”

“With regard to what should be improved at BLG, we work with many lenders in our business and we do not get the help and response we have had on the two projects with all at BLG on our funding for our developments.”

“We would particularly mention Dave Edwards and Tom Pitts as being central to having a smooth working relationship and being positive and helpful at all times. Their guidance in helping us navigate the project from inception to completion was invaluable. As was their patience, particularly at the beginning. We look forward to many future projects with the BLG team.”

“We would like to express our appreciation for your support on our development in Bristol. We were very pleased that, from the outset, you shared our vision of the project to convert a dated but classical building, that had outlived its usefulness as a school, into unique luxury apartments with views overlooking the city. We found our dealings practical and streamlined. Monthly payments were processed in an efficient and timely manner.”

“BLG are very good at communicating with clients and all documents are very clear and all at BLG are always happy to help.”

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