Brownfield property development finance
Even the most cheerless and and polluted plots of land are being viewed by property developers as attractive propositions for housing schemes. We are well used to seeing old factories and office blocks turned into trendy apartments, but now petrol stations, workshops and even landfill sites are all fair game.
Planning policy has historically demanded that 60% of land used to build new homes should be on sites which have had a previous use. Local authorities earn credit for encouraging the re-use of so called “brownfield sites”, not least from local residents who are bound to fight any proposals to build on greenfield sites. Of course there are other more subtle advantages to using brownfield sites, such as social and infrastructure considerations.
Plot search and land-for-developers search tool for brownfield sites
Finding suitable brownfield sites for development is half the battle for property developers. So, if you are struggling to find the right plots, or you find that each time you find one you’re just that little bit too late then plot search is the ideal solution for you. This service will keep you supplied with an endless stream of ready-to-build plots ahead of the competition. Plot search and Land for developers search tool are the ideal solutions for any property developer.
One of the challenges with developing browfield sites is the size of the plot. An old town centre petrol station or workshop might only occupy a relatively small footprint. Because of the economies of scale most property developers are only interested in building 30 or more units at a time. This means that there is a gap in the market place which some specialist property lenders are willing to help ambitious developers exploit.brownfield site being developed
Arranging Development Finance for Brownfield Sites
Arranging property development funding for polluted land does not have to be an issue, so long as the lender involved knows the extent of the pollution and costs of mitigating it. Obviously this will impact the profitability of a project but with town centre apartments still attracting a premium this can alleviate concerns about profit margins.
Having evaluated a development opportunity and established that contamination may be an issue most development lenders will then insist on specialist reports to establish the levels of pollution. The next step is to ensure that the team employed to deal with the problem has all the requisite skills and experience.
Although developing a contaminated site might be perceived as a problem by some property developers and their funding partners, to the savvy developers it can represent a genuine opportunity to purchase a site at under value.
There are property development lenders with a variety of schemes to cover the purchase and development of brownfield sites. Meaning that there are property development finance companies willing to lend money to purchase a brownfield site with no planning permission on the basis that there is a reasonable chance of permission being granted.
The types of funding vary from modest Loan to Values (LTV’s) with competitive rates, right up to the specialist schemes offering up to 100% funding and rates reflective of the risks. Once the development project gets underway the key challenge is to turn things around as quickly as possible, this is where choosing the right funding partner is vital. Banks have a reputation for being slow to release staged payments and for being rigid when problems arise. Specialist property development finance lenders tend to be more flexible and willing to accommodate last minute changes to plans, but their fees tend to be higher.