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The Client’s Situation
Two existing clients approached us for development finance on a site they already owned. Their objectives were to refinance an existing bridging loan and fund the completion of a new residential scheme.
The site had full planning consent for 9 new-build homes alongside the refurbishment of an existing property – creating 10 units in total for sale upon completion.
- Site value: £1.3m
- Outstanding bridge: ~£660k
- Build costs: £1.95m (+10% contingency)
- GDV: £4.225m
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The Challenge
Despite strong developer experience and a proven track record in the local area, two key issues complicated the deal:
1. Contractor timing vs. bridge deadline
The bridging loan required repayment before a main contractor could be formally appointed. Most lenders require a fixed build contract pre-completion, creating a funding gap risk.
2. Loan-to-GDV constraints
The required facility exceeded typical market LTGDV limits based on the scheme alone. This raised concerns around exit viability and lender risk.
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Our Solution
We leveraged the client’s track record and deep knowledge of local build costs to structure a flexible solution.
- Secured a lender willing to proceed without a signed build contract at completion, subject to funds for works being released only once a JCT contract was in place
- Enabled immediate repayment of the bridging loan, avoiding costly extension fees
- Strengthened the deal by adding £210k of unencumbered property as additional security, reducing leverage concerns
- Minor remaining shortfall covered by the client
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The Result
Following valuation and monitoring reports that aligned with projections, the lender issued terms:
- £645,000 day-one net advance (with £15,000 client contribution)
- £2.15m development facility
- £307,000 interest and fees
- £3.1m total facility at 70% LTGDV (blended across site + additional security)
- An 18-month term provided
Post-completion, the client appointed a contractor within 4 weeks at a fixed £1.95m, validating the initial underwriting assumptions and common-sense approach to lending.
This deal demonstrates how pragmatic structuring and lender flexibility can unlock complex developments – balancing risk, meeting tight timelines, and maximising overall project viability.
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