At UTB we understand that development sites are often like buses – you wait ages for one to come along and then three turn up at once.
Timing is always an important issue with our developer customers as most of them don’t have the luxury of having large cash reserves sitting in their bank accounts. For many, the majority of their capital is tied up in their current schemes.
We know this is the reality for most SME housebuilders and we like to accommodate and enable the next project, even if the developer’s hard earned equity is tied up completing their existing projects.
One of our borrowers, a successful architect turned developer, was completing the conversion of an existing barn property into six homes whilst at the same time building a single large detached house on a separate scheme. UTB was funding both projects and when the opportunity to acquire a further site arose, the developer contacted us to discuss funding and to request a release of equity from his existing projects in order to raise sufficient cash to secure the new site.
Although neither of the ongoing developments were at practical completion, which is usually a requirement for releasing equity, we took account of our long standing relationship and decided to take a pragmatic approach to the situation. In this respect, both the existing builds were progressing on schedule and on budget and there was already strong interest being shown in several of the barn units. When the case was presented to the Bank’s Credit Committee the request for additional funding was approved.
The equity released from the current developments enabled the borrower to secure the new site, a scheme with planning for four houses. UTB then provided a new facility which would contribute to 50% of the remaining site purchase price and the full construction costs, professional fees and rolled up interest.
By adopting a flexible and supportive approach we enabled our customer to secure his next project and ensure that he would not be hanging around for the next site to come along.
| Borrower | Developer |
| Amount | £4.4m |
| Loan Type | Development Finance |
| Location | South West |
| LTC | 83% |
| Project type | • Barn conversion in to 6 homes • Large detached new build house • 4 new build traditional homes |
| Special Features | • Release of equity to fund land acquisition • Unlocking value before practical completion • Architect turned Developer |