Affinity Group was approached by a New Home and Land Estate Agent offering a development site that has planning approved for 9 detached dwellings with a GDV of circa £3.5million.
Due to the location of the site, we offered the opportunity to one of our contacts in the area who viewed the site and fell in love with its tranquil location and green views. The land price was offered in excess of £950,000.
After conducting a viewing on site with the estate agent, the client, and her team, we performed an on-the-spot appraisal of the plans and agreed a build cost for the scheme of £1,626,600 plus an estimated CIL payment of £41,500 (so a development cost of £1,667,500) within a development schedule of 18 months (Est).
The client’s remit was simple – to provide as much funding on day one to assist with the purchase and provide 100% of the development costs and associated professional fees, ideally the day one advance would be a minimum of £500,000.
As part of our research and structure planning for our client we went to market with the specialist development lenders to see who would agree to the terms and their pricing. Unsurprisingly, a number of our partners were keen to lend due to the calibre of the client, however, due to the high LTV very few were able to offer terms allowing 70% loan to GDV.
This tricky case was in jeopardy with the client bulking at the all-in rate 12.5% per annum (including arrangement and exit fees).
Affinity Group has built strong working relationships with lenders in the specialist finance space, due to track record we engaged with the Development Director of one of the big lenders to see if they could help and stretch their maximum LTVs based on our recommendation. Although they typically do not lend up to 70% loan to GDV, we shared a comprehensive memorandum with them and explained the inner workings of the deal and the solid reputation that the client has in the local area.
The great thing about specialist finance is that each and every case is bespoke, unlike the High Street where if the ‘computer says no’, the ‘computer says no’! After in depth conversations and negotiations our lender agreed to offer indicative terms to suit the client.
They were able to offer funding at 0.8% lower than the previously quoted offer and provide an additional £33,429 over and above the original quote.
All project monitor fees would be included along with additional day one funds, which over an 18-month scheme and with the gross loan of circa £2.45million means a saving of (on a like for like basis) £19,600 in interest and £33,429 of additional funding which is key. All in all, an extra £53,029 of cash in our client’s pocket for the project.
Safe to say she is over the moon and looking forward to starting the project.
These lender relationships have been honed over many years, the options available to us are simply not there for lots of brokers and we are proud of our record of success in making these difficult scenarios come to fruition.