Development deal of the week

Development deal of the week



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As niche funders continue to fill the development finance void left by mainstream banks, United Trust Bank (UTB) brings us its development deal of the week, a loan which helped.

As niche funders continue to fill the development finance void left by mainstream banks, United Trust Bank (UTB) brings us its development deal of the week, a loan which helped their client complete the project on time after the existing financier pulled out...

UTB was approached by an experienced south coast developer to provide funding on three completed schemes which would refinance his existing Bank who were withdrawing from the lending market.

The schemes comprised a mix of high specification housing and flats in good locations. Very quickly after the refinancing took place the client secured a number of sales and gradually reduced the borrowing to a very low LTV. Using the remaining assets and the equity created from sales UTB was then able to assist the client with his next project, funding 100 per cent of cost with an LTV of 60 per cent.

The development which comprised eight flats had been built on time and within budget. Marketing commenced and two early sales were achieved. Encouraged by the client’s track record and attention to detail, UTB recently agreed to fund a further project - again utilising equity created in his other scheme. The total borrowing over the three facilities was £4.2 million with an overall LTV of 60 per cent.

Commenting on the lack of appetite from mainstream lenders for development finance, Noel Meredith, Director of United Trust Bank, said: “It’s disappointing to see that new house building starts are down 11 per cent in Q1 2011 compared to Q4 2011 and falling well short of expectations. Housing and construction is hugely important to the UK economy and what appears to be one of the key factors holding back activity is a decline in the availability of development finance.

“The findings of our own survey revealed that 25 per cent of brokers found development finance harder to source in Q4 2011 with 50 per cent seeing no improvement in availability. It’s clear there’s still little appetite from mainstream lenders to increase the availability of development finance with them either restricting their development finance books or withdrawing from the sector altogether.

“However, lenders such as United Trust Bank are keen to provide finance for well planned developments in the right housing sectors and locations. Other lenders have come and gone but we have been consistently active in development finance and we’re always happy to talk to developers and brokers seeking residential development or short term finance.”

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