With the cost of housing in London unattainable to average earners, we’re seeing increased demand in areas such as Bedford and Stevenage for small unit development schemes.
As a result, we’re working with a number of developer clients at the moment who are favouring the development of smaller units, and looking for finance on projects in these commutable locations.
Who wants to buy in small unit schemes?
Young professionals working for companies in Central London – for example, Google in Kings Cross – might not be able to afford to get on the ladder in London. However, Stevenage, for instance, is less than 20 minutes from the capital, so purchasing property there could be the ideal solution.
Workers want to be based around the city, so they don’t mind if the area they live in still has some ‘gentrification’ to do, as they tend to spend most of their time – either working or socialising – in the capital anyway. If they can get access to London’s jobs and social scene, they’re more than happy to live on the outskirts.
They also don’t mind if their homes are of a slightly smaller square footage, as they won’t spend much time there.
This is a great opportunity for developers to deliver small unit development schemes in gentrifying locations, as they will make the same turnover per square foot, just over a larger number of units.
How can you get finance for small unit development schemes?
Whether you’re a small-scale developer or a large corporate developer, you will need an expert broker on your side to secure you the best development finance.
Typically, lenders will allow you to borrow 75% of the build cost – depending on the gross development value (GDV) ascertained by the lender. For example, if the cost of a development is £10million, and its projected GDV is £20million, with the lender setting 60% GDV as the maximum loan value, the lender will be happy to lend the £7,500,000 requested as it is below £12million – which is 60% GDV.
Our dedicated team of development finance brokers have the experience, and access to lenders, to find you the most beneficial solution. If you’d like to have a chat about your circumstances, one of our brokers would be delighted to speak with you.