Whilst things have been improving, developments have faced a multitude of issues over the past few years; supply and labour shortages, Covid, the cost of living crisis and numerous other factors have hampered projects across the UK.

As a result, the industry has seen an increase in projects overrunning over the past five years, leaving their future hanging in the balance.

If developers need extra time to add the finishing touches to their current development, or just want to make sure it sells for the right price, it is possible to use an unregulated bridging loan to pay off their existing development facility.

The short-term loan could potentially lower the cost of borrowing while relieving the pressure of a sales deadline; release additional capital for the next scheme; or allow final, minor works on an advanced-stage project, which is already “water and wind tight”.

The bridge is usually for a 12-month term and can be paid back from the proceeds of the development’s sale.

•   B&C Awards 2024: The Video
•   Together appoints three new regional account managers
•   Together loan book reaches £7.6bn

A great example of this in practice was a recent case we funded where the developer purchased an old working men’s club, with the intention of demolishing it and building a block of 36 high-end apartments.

Unfortunately, they ran into problems such as building supplier hold-ups, delaying the scheme.

The building warranty and required regulatory approvals were not signed off in time, so some units could not be sold, and as a result, the initial lender refused to extend the original facility to complete the work.

Brought to us by a broker partner, we were able to able to provide a 12-month unregulated bridging loan of £7.91m.

The finance was delivered in four weeks and, crucially, ahead of the developer’s deadline, meaning the project could be completed and the remaining apartments sold.

What brokers need to do when exploring bridging as an exit for developer customers is a correct lender to partner with.

It is essential to find one that can act quickly and provide certainty that they can fund, but also take the time to understand project, the customer, and the exit strategy.