Refurbishment & Development Finance

What is Refurbishment & Development Finance?

When embarking on the journey to convert an existing property or construct a new premises from the ground up, the critical aspect of securing financing becomes paramount. The financial resources at your disposal are closely tied to the scope and scale of your project, as well as your own prior experience in the field of real estate development. Securing financing for a real estate development project requires a combination of these factors to be carefully considered.

Types of Refurbishment & Development Finance

The available financing options are not uniform but rather tailored to the specific nature of the development project. These diverse projects can typically be categorized into three distinct categories based on their scope, scale, and objectives.

Light Refurbishment

Light refurbishment typically involves making minor, cosmetic enhancements to a property, such as upgrading the kitchen and bathroom, freshening up the decor, and installing new white goods. These projects are generally completed within a couple of months and do not entail any structural changes to the property. The advantage of light refurbishments is that they typically do not require planning permissions, although some work may fall under permitted development, depending on the nature of the changes.

Heavy Refurbishment

Heavy refurbishment projects entail more extensive and substantial work on the property. These projects often involve significant alterations that might require planning permissions or fall under permitted development regulations. The timeline for heavy refurbishments is more extended, ranging from 6 to 12 months, due to the complexity of tasks like rear, side, or loft extensions and other structural changes. Architectural or design-led oversight is frequently necessary to ensure that these projects are executed successfully.

Ground-Up Development

Ground-up development includes constructing new buildings on a clear site, as well as knockdown-and-rebuild projects. These are typically large-scale schemes that can include multiple units. Ground-up development projects often have longer project terms, extending up to 36 months. Financing is required for both the initial purchase of the land and the costs of development. Loans for ground-up developments are usually disbursed in instalments as the project progresses, and the finance terms are often based on the Gross Development Value.

Refurbishment & Development Financing offers a versatile range of solutions, with these three distinct categories helping to tailor financing solutions to the specific needs of each development project. Understanding the nuances of these categories is vital for successful real estate development ventures.

The experts at Altura Specialist Finance are on hand to help you navigate these options, allowing you to secure the right kind of financing for you, in accordance with your budget, timeline, and objective.

  • To secure development finance, it's crucial to demonstrate relevant prior experience related to the project you seek to finance. In certain cases, lenders may consider a project partner with the necessary expertise to collaborate with you.

  • The required deposit varies based on your project's type, cost, and end values. Generally, all lenders expect some cash input from the borrower.

  • Interest rates and associated costs fluctuate depending on the type of project being financed. During the refurbishment or construction phase, rates tend to be higher. However, once the project is completed, options such as selling the property or transitioning to standard bank finance often provide access to lower interest rates.

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