Achieving 100% development finance will generally require you to meet a strict set of criteria: details of this criteria follow within the article.
Generally speaking, lenders are happy to advance around 75% of the total cost of a development build. However, there are a variety of circumstances in which this amount isn’t enough to complete a development project. In some instances, a potential developer might be seeking 100% development finance.
Securing such a loan can be very difficult. Offering 100% development finance is understandably a source of concern for lenders. Especially if the loan amount is large, as it often can be in development projects, this creates a level of exposure that many lenders may be uncomfortable with. If you’re an inexperienced developer, lenders will be even less likely to offer this level of lending.
What are the criteria for securing 100% development finance?
It is possible to secure 100% development finance—but you will most likely need to go through a broker to do this. For example, we are currently working with a joint venture partner who can offer this level of lending. However, there are strict criteria for this offering.
You will need to be experienced with new build projects, and have full planning permission in place. Your project will need a maximum duration of up to 24 months, and should be a multi-unit residential new build or conversion with a maximum gross development value (GDV) of £700,000 per unit. Suitable for projects containing between 5 and 50 units, this partner can fund 100% of land and development costs, in return for a profit share in your favour.
Who can secure 100% development finance?
A broker’s perspective can be very handy when considering your ability to secure 100% development finance. We can look at your other assets to see if these can be presented as security for the loan. If you’re an experienced developer, we also have excellent relationships with some specialist lenders who will provide 100% finance to experienced developers—perhaps in exchange for a share of the profits.
Meanwhile, if you’re an inexperienced developer, it’s very unlikely you will be able to secure 100% development finance—but we have achieved this in certain circumstances; for example, we have previously helped an inexperienced developer achieve 100% finance by structuring his proposal as a joint venture with a more experienced builder/developer who had a strong reputation in their field.
As this is a difficult request to cater for, we would certainly advise contacting Enness to explore your options, as we are able to reassure lenders about the positive prospects and potential for properties. Enness is an independent, whole-of-market broker which has access to many opportunities that are not available on the high street.