Build to Let, also referred to as Build to Rent, abbreviated as BTR or B2R, was created in response to the rise in rental demand, which has historically been strongest but not limited to the capital.
This type of property development finance was explicitly created to help developers build projects that meet the needs and lifestyle of renters. These rental property developments often focus on making small communities with shared areas for socialising, which may include communal lounges, dining areas, outdoor spaces, and gyms.
By catering to lifestyle experience needs, they often command higher rental prices. Build to Let projects are intended to remain in the rental sector for the long term.
How Does Build To Let Work?
Build to Let finance is available to professional developers and landlords. The loan terms are typically up to 24 months with an exit plan, which is usually dependent on the properties being let and generating a rental income. When the exit plan matures, refinancing takes place, moving the lending to a Buy to Let mortgage. The same lender or another might provide this mortgage.
Can I Get Development Finance?
Property development loans for Build to Let projects are either not available through the traditional high-street bank network or are challenging to attain. Securing this type of lending through a bank can take a considerable length of time, holding up projects and increasing the overall development costs.
High street lenders may only offer a low percentage of the development costs, which might mean sourcing secondary finance to cover the shortfall. They may also only release funds in stages, further hindering the developer’s progress.
Specialised development finance lenders aid the financing route for developers who:
- Have experience in property developing or building
- Intend to undertake a Build to Rent project that is located in England, Scotland, Wales, or Northern Ireland
- Have planning permission for three or more units, which might include houses, flats, conversions, new builds, and mixed-use properties
Developers will need a strong business plan, rental projections, occupancy forecasts, and a rental and sales valuation to complete a successful application process.
BLG specialises in Build to Let finance and can help developers secure finance for their next rental development. We will help you get access to the best deals and rates with loans that are secured 100% on the development property. We offer market-leading rates on loans from £2 million to £10 million.