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How to apply for property development finance

Top Tips to Easily Apply for Property Development Finance

Property development is a crucial part of the UK economy and has been for many years. Indeed, during the pandemic, construction and property development was one of the few sectors that was largely unaffected.

When it comes to property development, there are many large housebuilders in the UK. And of course, the well documented demand for housing within the UK will in part be met by the large housebuilders.

However, the SME property developer has a very important part to play, carrying out 1000’s of projects throughout the UK ranging in size from £100,000 to carry out a flat conversion all the way up to £10 million to carry out new build schemes of 40-50 houses.

As a developer, the important message, is that regardless of the project or scheme you are looking to undertake, and whether you are an experienced developer who has carried out many projects before, or a first-time developer embarking on your very first project, funding is available.

Bearing mind property development finance is available, it then raises several questions. How do I apply for property development finance? And when applying for property development finance, what is the application process?


Making a Property Development Finance Application

Arguably, making an application for property development finance is more complex now than ever before. This is because there are so many new lenders in the marketplace all offering finance, that property developers can end up being spoilt for choice.

Essentially, as a developer you have two options. Option one is that you can go through the process of applying for property development finance yourself. This means knowing what information to provide, how the information should be presented to a lender, and then knowing which lender to approach, hoping it will be the right lender for your particular project.

As I’ve already mentioned, making a property development finance application is complex and you don’t want a situation where you spend a lot of time and money only to find that you can’t access the finance you need.

The alternative when it comes to making a property development finance application is to use a specialist broker to help you. An experienced finance broker will know the market, they will know which lenders to approach, and importantly understand how to apply for property development finance so that your application stands the best possible chance of success.

If you decide to use a broker, make sure you use a broker who is registered with the NACFB (National Association of Commercial Finance Brokers). Being part of the NACFB means they have signed up to a Code of Practice which means you can have confidence in the broker you have approached.

So, my first tip when applying for property development finance? Make sure you use a specialist broker who has experience of the market and who can help you through the process.


The Process When Applying for Property Development Finance

It starts with you finding a project that you want to undertake. If you are a first-time developer, you may wish to start with a project such as a conversion of a house to flats, or a refurbishment and extension of an existing property.

Of course, a more experienced developer is more likely to want to undertake a bigger scheme perhaps involving a new build or ‘ground-up’ development.

Regardless of the type of scheme you are looking to undertake, the process when making an application is broadly the same.

At Funding Track, it starts with what we call a Deal Recon. This is a 20-minute conversation over the phone, when we discuss the outline of your project and then give you an idea of what the funding options are likely to be.

The next step is what we call a Deep Dive Evaluation. This is a 60–90-minute meeting at our offices or over Zoom. This is where we find out all about you, your background and your experience. We also want to get all the information about the project.

As far as we are concerned, the Deep Dive Evaluation is arguably the most important part of the whole process of applying for property development finance.

This is because, during the Deep Dive, we listen! It is our opportunity to find out everything we need to know about you and your project. That ensures your application has the best possible chance of success.

So my next tip is to make sure that for that first meeting, you have all the details regarding your project at ‘your fingertips’. It will give you a head start and means that when you start the formal process of applying for finance there are no unnecessary delays.


How to Apply for Property Development Finance

The actual application for property development finance will be made by your broker.

However, in doing so, your broker will ask you to provide information relating to the project. So to help you prepare, let me go through the documentation we ask for from our clients as part of the application process:

  • Background and CV on yourself. In particular details of any previous development projects you have undertaken is very useful. When providing details of previous projects, make sure you include a description of the project, the purchase price, the cost of carrying out the works, the total sale price and the profit you made.
  • Location and address of the property or site you are developing.
  • Copy of the planning permission
  • Copy of the design and access statement
  • Location drawings as well as plans of the actual development you are undertaking
  • Breakdown of the build cost
  • Development appraisal
  • Breakdown of your funding requirements.

Don’t worry if you don’t have all of this information. For instance, we can obtain copies of the planning permission, the drawings and plans, and the design and access statement by downloading them from the local authority planning portal.

But it is important that you have available a breakdown of the build costs together with a development appraisal. If you don’t have these available, don’t worry as we can provide templates you can use.

Once we have all the information and you are ready to move forward, we then put together a formal deal submission and send it out to our lenders.

Developers often ask us how to apply for property development finance. Our answer is always the same. It starts with good preparation and making sure you have all the paperwork we’ll need so that when we submit your application to a lender it has the best possible chance of success.

If you have a development project and you are ready to apply for property development finance, speak to one of our experts and let us help you access the finance you need.

Contact our one of our New Business Consultants:

Telephone: 020 3857 3030

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