Email BLG [email protected] Call BLG 01483949494
Navigating Development Projects with Precision and Expertise

Navigating Development Projects with Precision and Expertise

by | May 10, 2024 | Advice

So, you are borrowing money from BLG to develop your project… our involvement will obviously centre around the Monitoring Surveyor’s regular reports and making the payments to fund the site, which we aim to turn around as fast as possible.  We also monitor how the marketing is going and follow through on the sales and refinancing process. Part of this involves visits from our team to make sure that we understand what is happening and to keep a good and open dialogue with the development team. We find it really helps to smooth the way as and when problems arise, which let’s face it on a development site, seem to be an occupational hazard!

BLG employs construction specialists as well as traditional finance people, so that we can really support our borrowers as things progress.

Our monitoring ranges from seeing sites from the earliest stage to when the properties are completed or near-complete.

Here are a range of our current projects, giving you a glimpse into their varied aspects. They include a complex conversion of a listed building at the strip out stage, a show flat for a high quality finish on a tight budget, a very high spec and technical seaside project built on a ground up basis and the conversion of a large building to include retail, community space and residential.

The monitoring is never boring and can sometimes afford beautiful landscapes and views. The weather doesn’t always play ball but spring and summer times are upon us, so we will start to enjoy the fresh air all the more!

A very high spec and technical seaside project A show flat for a high quality finish Conversion of a listed building

Cécile Verroest, Risk Director, BLG Development Finance

How To Determine The Right Financing Structure For Your Development Project

How To Determine The Right Financing Structure For Your Development Project

by | Jan 10, 2024 | Advice

Embarking on a development project is a multifaceted journey that requires careful planning, strategic thinking, and, perhaps most importantly, the right financing structure. The financial blueprint of your project plays a pivotal role in its success or failure. In this article, we’ll explore key considerations to help you determine the optimal financing structure for your development project.

  1. Project Scope and Scale: Before delving into financing options, it’s crucial to have a clear understanding of the scope and scale of your development project. Different projects, whether residential or commercial, come with distinct financial requirements. Ensure that the financing structure you choose aligns with the size and complexity of your endeavour.
  2. Risk Assessment: Assessing risk is an integral part of any development project. Understand the potential risks associated with your project and evaluate your risk tolerance. High-risk projects may require more robust financial backing or alternative financing structures. Striking the right balance between risk and return is essential for the long-term success of your venture.
  3. Timeline Considerations: Development projects often operate on tight timelines. Consider the duration of your project and whether you need short-term or long-term financing. Bridging loans are a popular option for projects with immediate funding needs and can provide a financial bridge until more stable, long-term financing is However, if you know you will need development funding, it’s best to secure that before entering a bridge loan where the exit is unknown.
  4. Cost Breakdown: Break down the costs of your development project into distinct phases, such as land acquisition, construction, and marketing. Different financing structures may be better suited to specific phases of your project. Tailoring your financing approach to the unique financial requirements of each stage ensures a smoother financial flow.
  5. Interest Rates and Terms: Scrutinise the interest rates and terms offered by potential lenders. A financing structure might look appealing at first glance, but the devil is often in the details. Understand the terms of the loan, including interest rates, repayment schedules, and any associated fees. Choose a structure that aligns with your project’s financial capabilities.
  6. Diversify Funding Sources: Consider diversifying your funding sources to mitigate risk. Relying on a single source of financing can leave your project vulnerable to market fluctuations or changes in the economic landscape. Explore a mix of traditional loans, private financing, and potentially government incentives to create a resilient financial structure.
  7. Consult Financial Experts: Don’t hesitate to seek advice from financial experts. Engage with financial advisors, accountants, or development finance specialists who can provide insights into the most suitable financing structure for your specific project. Their expertise can help you navigate complexities and make informed decisions.

Choosing the right financing structure for your development project is a critical step in ensuring its success. By carefully considering the project’s scope, assessing risks, and aligning financing with your timeline and cost breakdown, you set the stage for a financially sound venture. Remember, each project is unique, and there is no one-size-fits-all solution. Take the time to explore options, consult with experts, and craft a financing structure that paves the way for your project’s prosperous future.

BLG Your Partner For Tailored Success

In the dynamic arena of development projects, securing the right financing structure is paramount, and BLG Development Finance stands out as a trusted partner offering a versatile range of funding options. From residential development finance, covering land acquisition to construction costs, to specialised solutions for commercial projects and bridging loans addressing time-sensitive needs, BLG’s expertise caters to diverse project demands.

BLG has a 20 years’ track record in the sector lending in both the good time and bad – one key factor in choosing a lender is finding a partner who lends during challenging economic time.

What sets BLG apart is our collaborative, holistic approach working closely with clients to understand project intricacies and deliver personalised financing solutions that seamlessly align with goals and timelines. Choose BLG as your financial collaborator, ensuring a solid foundation for the success of your development project.

How To Find The Right Property For Development

How To Find The Right Property For Development

by | Jan 10, 2024 | Advice

In the world of property development, one of the most critical decisions you’ll make is selecting the right property or site for your project. If you’re looking to build a new home, you’re probably on the hunt for newer, better ways to find sites for development. The success of your venture heavily depends on the location and suitability of the site you choose. If you don’t research the area and find out what type of property is in the most demand, then you could end up holding onto a property that simply won’t sell. Here at BLG we explore some top tips on how to find the perfect property and area for development.

Market Research

Before embarking on a search for sites, your expectation will need to be researching many sites before finding a site that works, as there are many sites where development is unviable. Thoroughly investigate the real estate landscape within your intended location. Identify regions with growth prospects, strong demand, and favourable economic conditions. The choice of a promising location can have a substantial impact on the success of your project.

Inadequate research may lead to complications when selling or renting the property. Different areas are better suited to specific types of development. For instance, urban areas often prove conducive to building apartments and one or two-bedroom homes. Prior to breaking ground, it is imperative to conduct comprehensive area research, including an understanding of the property types in demand and their associated average prices. Addressing market gaps increases the likelihood of selling your developments and achieving profitability.

Network & Collaborate

Networking and collaboration are crucial aspects of finding the right property for development. Building relationships with local real estate agents, property developers, and professionals in the industry can open doors to valuable opportunities and resources. Here’s an expanded look at how to network and collaborate effectively:

Connect With Local Real Estate Agents

Local real estate agents are often the first to know about new properties coming onto the market. They can provide you with listings that match your criteria and help you navigate the buying process. Meet with several agents, express your goals, and maintain open communication with them.

Engage With Property Developers

Property developers, especially those with experience in your target market, can offer insights into the best areas for development. They may also have off-market properties or partnership opportunities. Attend industry events, seminars, and conferences to meet and learn from experienced developers.

Attend Real Estate & Development Events

Networking events, real estate expos, and local business gatherings are excellent opportunities to meet potential partners and collaborators. Engage in conversations, share your goals, and be open to learning from others in the field.

Online Platforms & Real Estate Listings

Utilise online resources to search for properties. Websites like Rightmove, Zoopla, and OnTheMarket, as mentioned, can help you find listings in your desired areas. Set up email alerts to receive notifications of new listings that meet your criteria.

Social Media & Forums

Participate in social media groups, forums, and discussion boards related to real estate and property development. These platforms can be a source of valuable information, and you can connect with professionals and enthusiasts who share your interests.

Local Government & Planning Departments

Establish a good working relationship with local government officials and planning departments. They can provide valuable information about zoning changes, future development plans, and potential incentives for your projects.

Visit Potential Sites

Don’t rely solely on online information, visiting potential development sites in person is an essential step in the property search process. When you visit a property in person, you can evaluate its physical condition, which may not always be accurately represented in online listings. Inspect the existing structures, infrastructure, and any potential issues, such as structural damage, mould, or environmental concerns.

Furthermore, being on-site allows you to assess the property’s location more thoroughly. You can gauge the proximity to essential amenities, transportation hubs, schools, parks, and shopping centres. Understanding the neighbourhood and its growth potential is critical for a successful development project. Sometimes, a gut feeling, or local knowledge gained from visiting a site can be invaluable. Your instincts and the information you gather during a visit can help you make a more informed choice.

Auctions

Another great approach to discovering property development prospects involves attending a property auction. It’s often possible to acquire the auction catalogue in advance, allowing you to conduct the necessary research before participating in the auction event. Even if a property appears to be attractively priced, it could potentially be in a problematic area or have unfavourable neighbours, making it challenging to rent or sell in the future.

A variety of property types may be included in the listings, including those ready for immediate development, those in need of renovation or refurbishment, and opportunities for land development. It’s advisable to enter the auction with a predetermined budget in mind and avoid getting caught up in the excitement of the auction atmosphere.

Analyse Costs

Always make sure you evaluate the expenses associated with property acquisition, encompassing the purchase price, legal fees, and potential renovation or development costs. Ensure that the property aligns with your financial plan. Identifying the most lucrative development opportunity is a challenging task, heavily contingent on the location you intend to develop.

When constructing within urban or city centres, you typically have the capacity to charge higher rates per unit, but the development process is likely to incur higher costs. Conversely, suburban homes may have a somewhat lower cost per unit compared to urban areas, but they could yield larger profit margins per unit, ultimately resulting in greater overall profits. Lastly, apartments tend to generate more substantial profits since you can accommodate a greater number of units on the same amount of land, which proves especially advantageous in areas where land availability is limited.

Environmental Considerations

Evaluate any environmental factors that may affect your development, such as contamination, flood risk, planning permissions or natural preservation areas. These factors can significantly impact your project’s feasibility. You need to understand the different types of land, from farmland, industrial, greenbelt or brownfield. What they offer, and their limitations before deciding on making a purchase.

Finance With BLG

Finding the right property is a crucial step in your property development journey. Taking the time to research, evaluate, and select the best property for your project can lead to a more successful and profitable development. BLG are a leading lending specialist in property development finance, who’s expertise, support and guidance can get your projects off the ground successfully. Contact BLG today.

A Guide To Getting Started In Property Development

A Guide To Getting Started In Property Development

by | Jan 10, 2024 | Advice

Property development within the UK can be an exciting and lucrative venture, for those seeking to expand their wealth or even establish it as their primary business. Although government regulations, finance updates and unforeseen circumstances such as the pandemic have unquestionably influenced the UK housing market. Creating a somewhat less enticing feeling towards property development than prior years. However, the industry remains a stable long-term investment avenue that can yield substantial returns when executed correctly.

Despite the economic downturn, along with tangible challenges such as material supply chains and costs, as well as difficulties in hiring post-Brexit, there are indicators that the UK property market will persist in growing over the medium term. UK property development still stands as a more dependable option compared to most other sectors.

Although it is crucial to understand the process involved before you embark on your journey. Whether you’re a novice or a seasoned property developer, having a clear understanding of the steps involved can make your project smoother and more successful. This guide aims to provide you with insights into the risks, rewards, and genuine opportunities associated with entering the field of property development.

This property development guide will cover:

  • Creating a property development business plan
  • Buy-to-let vs buy-to-sell
  • Market research
  • Calculating ROI/Rental yield
  • Renovating for sale or rent
  • Financing your property development
  • Final thoughts

Property Development Business Plan

To a certain extent all business plans no matter which sector follow a similar structure. Overall, the plan should outline your business objectives and the strategies you’ll employ to achieve them. Begin by defining your goals and objectives for the project. Determine the type of property you want to develop, the target market, and the expected return on investment. Several critical components demand clarity before you embark on any investments.

Start by addressing the following:

  • Who is your target market?
  • What sort of properties are likely to appeal to your target market?
  • How are you going to obtain funding?
  • Expected timescales and costs for construction or renovation

There are various property development business plan templates, experts and management software that can help you create your own.

Opting for Building-to-Sell or Building-to-Rent

The next step involves making an informed decision about the specific type of project you want to concentrate on. In order to align with your objectives, thorough research is necessary to determine the most suitable business approach. Build to sell or build to rent. These represent two lucrative property development business models. However, the decision between the two is crucial.

Building to Sell

Under the building-to-sell model, your aim is to construct one or more properties for the purpose of selling them. After successfully completing a project, your focus turns to selling the property for a profit. You may also consider purchasing a substandard property, renovating it to a high standard, and then selling it for a profit. These approaches yield returns through capital gain, typically selling at a higher price than your total construction costs. Many developers using this method transition from property development financing to development exit financing to minimise interest expenses.

Building to Rent

This business model is centred on constructing a property with the intention of renting it out. Building-to-rent aims to establish a consistent, long-term income stream. Depending on your rental agreement, you can expect a fixed, regular income from the property. However, this model necessitates diligent property maintenance to preserve its value. Including arranging for repairs, ensuring that things like the smoke detector and boiler are regularly inspected, and potentially even finding tenants and checking their references and credit scores. It provides extended term returns but may pose challenges in securing funds for your next project.

It’s worth noting that you can transition between different property investment models. For instance, you might decide to sell a property after renting it for several years or use the gains from a buy-and-sell property to venture into a buy-and-hold investment.

Market Research

Before any investments take place, it is vital to conduct thorough financial analysis and gain a clear understanding of the real estate landscape in your chosen area. Familiarise yourself with the preferences of potential buyers or renters in that area and determine your budget for property acquisition. Commencing your property investment journey in a nearby location is often wise due to your familiarity with the local area. However, you might also consider exploring more distant areas to discover which have significant growth potential. Search for regions where properties are in high demand, sell swiftly, and show signs of active construction or investment, as these are promising indicators of an area on the rise.

The Significance of Location

The key is to identify areas just on the verge of becoming popular, where housing prices are poised to rise. Look for locations situated at the outskirts of bustling urban areas or for buy-to-let investments, university cities are a favourable choice. Websites like Rightmove offer easily accessible data on the selling prices of houses in various areas.

Always put yourself in the shoes of your target audience. Accessibility to transportation is crucial, as young professionals and students seek proximity to bars and restaurants, while families prioritise safety and access to quality schools.

Establish connections with local real estate agents who possess insights into the preferences of potential buyers and renters in the area. Regularly check in to cultivate personal relationships that ensure you’re the first to be informed when suitable properties become available.

Financing Your Property Development

Next you need to establish a budget for your project, including acquisition costs, construction expenses, and any other associated costs. Seek financing options and secure the necessary funding. There are various options for property development finance from bridging loans, development finance and mortgages. Here are just 4 options you can start to consider.

  1. Property Development Finance: Development finance is a type of lending that helps businesses, entrepreneurs, and property developers to access funding for development projects – both residential and commercial. BLG offers both seasoned developers and those just starting, development loans from £1,000,000 to £15,000,000.
  2. Bridging Loan: Bridging loans are short-term, high-interest loans often used by individuals needing to acquire a property while waiting to sell another. Property developers also favour these loans, using them to purchase, renovate, and subsequently sell properties, repaying the loan and interest in the process. These loans are secured, making them most suitable for those who have property or land that can serve as collateral. A clear exit plan, outlining how the loan will be repaid at the term’s end, is essential. BLG offer property developers loans from £500,000 to £10,000,000 up to 12 months but longer term can be considered.
  3. Buy-to-Let Mortgage: If your intention is to rent out a property after purchase, you can’t rely on a standard mortgage. Instead, you’ll need a buy-to-let mortgage. These typically come with an interest-only structure, larger deposit requirements, higher interest rates, and increased fees compared to standard mortgages.
  4. Buy-to-Sell Mortgage: Standard mortgages are not suitable for those looking to buy, renovate, and quickly sell a property. Opt for a buy-to-sell or flexible mortgage, which allows for a shorter holding period. However, this convenience comes at the cost of higher interest rates, elevated fees, and a significantly larger deposit.

Summary

Property development can be an exceptionally profitable and fulfilling pursuit. While it requires dedication, instinct, and skill to excel in it, it’s a field accessible to anyone willing to learn. By following these steps, you can navigate the property development process with confidence and increase your chances of a successful and profitable venture. Keep in mind that each project is unique, and flexibility is essential when adapting to unforeseen challenges.

Securing development finance is a relatively straightforward process. If you’re considering a deeper involvement in this field, our advisors and team at BLG are ready to offer free, no-obligation guidance whenever you require it. Contact us today to find out more.

Analysing The Impact Of Energy-Efficient Upgrades On House Prices And The Housing Market

Analysing The Impact Of Energy-Efficient Upgrades On House Prices And The Housing Market

by | May 2, 2023 | Latest News

The impact of energy-efficient upgrades on homes has become a topic of increasing interest in recent years. As the world continues to grapple with the challenges of climate change, energy-efficient upgrades have become a crucial tool for reducing energy consumption and greenhouse gas emissions. At the same time, these upgrades can also have a significant impact on the value of a home, with some studies suggesting that energy-efficient homes can command a premium on the housing market.

EPC Ratings

Energy Performance Certificates (EPCs) have become an important part of the housing market in recent years. An EPC rates the energy efficiency of a property on a scale of A to G, with A being the most energy-efficient and G being the least energy-efficient. The certificate also provides recommendations on how to improve the energy efficiency of the property. Properties with higher EPC ratings are more energy-efficient, which means that they are cheaper to operate. Rightmove reported that 47% of landlords say they would not buy a property with an EPC rating below a C in the future.

What Is The Green Premium?

The green premium is the difference in price between an energy-efficient home and a comparable home that is not energy-efficient. In other words, it is the premium that buyers are willing to pay for an energy-efficient home. The concept of the green premium is based on the idea that energy-efficient homes are more valuable than comparable homes that are not energy-efficient, as they are cheaper to operate and more environmentally friendly.

The green premium can be measured in a number of ways. One approach is to compare the sale prices of energy-efficient homes and non-energy-efficient homes in the same neighbourhood or market. Another approach is to estimate the increase in the value of a home that results from energy-efficient upgrades, such as the installation of solar panels or the replacement of windows and doors. A survey by RICS, which involved estate agents, revealed that 41% of them believed that purchasers were displaying a higher level of interest in energy efficiency.

Energy-Efficient Upgrades & House Prices

Investing in energy-efficient upgrades for a home not only reduces the property’s environmental impact but can also lead to significant energy savings, resulting in lower utility bills over time. Houses with upgrades such as heat pumps are typically considered to have a “green” premium due to their energy efficiency and eco-friendly features. Heat pumps are highly efficient and use renewable energy to heat homes, reducing the carbon footprint of a property.

Several studies have examined the impact of energy-efficient upgrades on house prices. These studies have generally found that energy-efficient homes command a premium on the housing market. Santander’s research indicates that individuals are willing to pay a 9.4% premium on residences that have been retrofitted to comply with “energy efficiency standards.” Additionally, estate agents believe that buyers would be willing to pay up to 18% more for such properties. By analysing extensive data, PriceHubble has determined that properties with poor energy efficiency are valued at up to 20% less than their energy-efficient counterparts. According to Rightmove, enhancing a property’s energy efficiency rating from an F to a C could result in a 16% increase in its value.

The reasons for the green premium are straightforward. Energy-efficient homes are cheaper to operate, which means that owners of energy-efficient homes save money on their energy bills. In addition, energy-efficient homes are more environmentally friendly, which is becoming an increasingly important consideration for many homebuyers.

The Impact On The Housing Market

In addition to the impact on house prices, energy-efficient upgrades can also have a broader impact on the housing market. One potential impact is that energy-efficient homes may sell more quickly than comparable homes that are not energy-efficient. This is because buyers may be more attracted to homes that are cheaper to operate and more environmentally friendly. Furthermore, energy-efficient upgrades may lead to an increase in the overall value of the housing market. This is because energy-efficient upgrades can reduce the demand for energy, which in turn can lead to a reduction in the cost of energy. This reduction in the cost of energy can make housing more affordable, which can increase demand for homes and lead to an increase in the overall value of the housing market. As energy-efficient upgrades become more common, builders may begin to incorporate energy-efficient features into new homes as a standard practice. This can lead to an increase in the overall quality of new homes, which can also lead to an increase in the value of the housing market.

Market Shift Concerns

This potential shift in the market poses a significant concern for mortgage lenders and their regulators, who fear a potential “disorderly transition”. Lenders are taking steps to encourage their clients to retrofit their homes by offering various incentives, including cash-back schemes and low-interest loans. Furthermore, government initiatives and financial incentives, such as the Renewable Heat Incentive (RHI) in the UK, are encouraging homeowners to switch to renewable heating systems like heat pumps. These incentives can further increase the green premium of heat pump-fitted homes, making them an attractive investment for homeowners looking to improve their property’s value while minimising their environmental impact.

Chris Brown, chief executive, and founder of Climatise states that “It is essential for the government to play a role in facilitating a smooth shift towards energy-efficient housing. The cost of retrofitting a house to reduce its impact on the environment, through better insulation and replacing a polluting gas boiler with a cleaner and three times more efficient heat pump, cannot be entirely recovered through energy bill savings”.

With looming climate deadlines and carbon budgets running out, the government’s lack of action in this area may only increases the risk of a sudden and dramatic shift in the housing market. As a result, the green premium gap may widen rapidly, emphasising the importance of retrofitting homes to improve energy efficiency and reduce carbon emissions.

    Quick Enquiry?

    We’re here to help.