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Build to Let Development Finance

Build to Let Development Finance for All UK Developers

The housing market in the UK has seen multiple upheavals in the past decade or so. What once used to be a straightforward indicator of the middle-class economy now reflects the tentative health of the entire economy. Following the global recession that unfolded in 2008, there has been a significant upward movement in the housing market. This also holds true for commercial properties. In such a case, it’s no wonder that developers have been feeling increasingly confident of generating profits from property development.

This is the main reason why build to let finance – a traditionally uncommon mode of Development Finance – is on the rise in the UK. If you are a developer who plans on developing properties from the scratch to let, our exhaustive build to let development loan solutions have a lot to offer to your project.

What is Build to Let Finance?

Build to let finance is a specialty development loan. As the name suggests, it’s primarily aimed at funding build to let development projects. Due to its specialty nature, build to let finance varies significantly from other types of Development Finance.

Build to let finance allows the developer to borrow capital to get the development project started. The exit strategy that such projects follow hinges solely upon the rental income that the project aims to generate. This is in stark contrast with other Development Finance products that use the sale of the property to exit the project.

Build to Let Finance Term

This is another factor that characterises build to let finance. Other types of Development Finance are usually termed over the period of development. This period usually lasts for 6 to 18 months. Build to let loans, however, can last up to 5 years, depending upon the lender’s appetite.

This is mainly due to the fact that the exit strategy used by build to let loans takes longer to materialise.

Build to Let Finance Interest Rates

Build to let loans that we broker carry competitive interest rates. The repayments for such Development Finance usually commence during the ‘snagging’ period. This is the period during which the property is not fully developed but is fit enough to be let.

Most lenders prefer to hold a certain equity in the project, along with any security or collateral. This share of equity is released appropriately as the repayments are made. This is quite similar to mezzanine finance.

Types of Build to Let Finance

Build to let loans can be divided into three broad categories as noted below.

Residential Build to Let Finance

This is the most widely used type of build to let finance. Such loans are used exclusively to develop residential rental properties. These residential rentals can take many forms – from simple rental flat units to a student dorm, and from a House in Multiple Occupation (HMO) to a lodging house.

The borrowers of residential build to let finance include landlords as well as specialist developers. For landlords who also wish to freehold the property upon development, residential build to let loans can be the ideal mode of financing the development.

Commercial Build to Let Finance

While not common, this type of build to let loans certainly is proven to be profitable. If you are an experienced commercial property developer, you can secure affordable build to let finance to drive your commercial rental property development projects ahead.

Such projects usually include development of office space, storage space, rental factory floors etc.

Mixed Use Build to Let Finance

Mixed use build to let finance is typically used to fund the development of semi-commercial properties. Such projects include partial rentals, B&B units etc.

Advantages of Build to Let Finance

  • Flexible loan terms
  • High GDV (up to 70%)
  • High LTC (up to 90%)
  • Affordable repayments, based on estimated rental income
  • Option to attach a buy to let loan upon development
  • Allowance to hold the property until the target sell price is in sight

Choose from the Best Build to Let Development Finance Offers

It’s difficult enough to look after the planning side of things when you undertake a property development project. Finding a suitable lender and an agreeable Development Finance offer can add quite a bit of hassle to this.

But things don’t have to be so tough. With a seasoned whole of market broker like Commercial Finance Network on your side, your development projects have the best chance of taking off. Having brokered numerous development loans for landlords and developers across the UK, we know what it takes to match development loan applications with specialist lenders.

Get in touch with us today to discuss with us how our build to let development loan brokerage service can help your dream project!