A property developer has won a High Court case against property investors forcing one to pay £133,000 after they backed out of an agreement to purchase flats "off plan".
The High Court, in Bristol, has ordered the person to pay a whopping £133,282 in damages, costs and interest to Plymouth's Prestige Homes South West Ltd, after pulling out of a deal to buy two Zero 4 flats in Plymouth.
We thought that Mezzanine finance in the property industry had all but disappeared. Two or Three years ago there were plenty of options with Mezzanine finance with lenders keen compete with each other.
There are increasing signs of improvement in the property market, but does this mean that property developers will be able to get 100% funding again any time soon?
Well, think back a few years and you will recall that relatively inexperienced developers were able to make good money just by purchasing a property and hanging on to it for six months. In fact several did and thought they were turning into professional property developers.
Mezzanine finance is the funding that makes up the difference between the level of bank funding and the actual project cost. Mezzanine deals can sometimes enable a property developer to take on a project which they might otherwise not be able to finance.
Bridging loans can be used for almost any purpose so long as there is enough equity in the property. The UK Bridging Loan market is estimated to be worth £2.5 billion and the demand for bridging loans is believed to be growing by 25% year on year. Bridging finance can be made available for many purposes, the obvious one being to bridge the gap between the purchase of a new property and the sale of an existing property.
Some people regard 100% property development finance as the holy grail of property funding. So it is not surprising that it is one of the most often requested types of loan. We should say right at the outset that 100% development finance is possible, however there are several important criteria that a lender will look for.
It is estimated that of the 200,000 new homes built in the UK last year approximately 20,000 were self-build developments, this is a two-fold increase on the previous ten years. This trend is also expected to increase, perhaps following in the steps of popular tea-time TV shows. The driving force behind the self-build explosion is probably the rising costs of buying a property coupled with an increasing awareness of the tax advantages of building a new house. Naturally the desire to have an individually designed home might have some small bearing too.
When people first start looking for property development finance they are confronted by a range of different options. One common misconception is that property development funding is only applicable to larger projects.
Whilst most of the UK is experiencing a chronic shortage in housing stock, the “one man band” property developer is probably going to be the unsung hero.Why? … Well, most of the larger property developers do not see enough profit in refurbishing existing property and are more interested in grand scale new-build schemes.
