Development
Finance FAQ
- Generally, How Does it Work?
- Our aim is to aid and assist you with your proposed development project and to ensure that any project which we provide finance maximizes its profit potential.
- By providing you with access to the Property Fund managed by Assetz Fund Management (which has £500 million pounds of Development funds available) we can provide you with up to 100% of all costs associated with your development.
- Competitors could charge you up to 50% of the anticipated profit of your scheme. We do not charge any large introduction fees or even take a share of the profit. Our income is generated from a management fee charged to the Property Fund. Please note this fee is shared across a significant number of other development projects.
- Our success is dependant on your success. The more profitable your scheme the more fee we earn from the Property Fund.
- Our finance arrangement is straightforward and contains no hidden costs or third party fees. We aim to give you an ‘in principle’ decision where possible within a few hours.
- We look to aid and assist you and not take over. The project remains your project and you remain fully in control. We do offer you over 20 years of development experience and knowledge from hundreds of completed development projects.
- Interest rates are typically 2.0% – 2.25% above base rate.
- The following diagram is provided as an explanation of the overall process.
- What are the Minimum Requirements?
- Typically we fund development projects with a completed sales value of between £1.0 million and £12.0 million. However depending on the details of your project we may be able to assist you if your project falls outside of these parameters.
- We provide full development funding when the land interest in a development site has been secured and planning permission for the proposed development is consented. We can also assist you if your project has not reached this stage with development advice and short term bridging finance for site acquisition and pre-planning costs.
- What Will We Fund?
- Funding will cover all costs associated with the acquisition of the site, construction costs, professional fees and sales costs. This is truly 100% funding.
- The funding is provided to a pre-agreed maximum facility limit and is drawn down in instalments which are subject to a valuation. The facility will cover all costs up to the point when the development can become self financing.
- Property development can be subject to unforeseen changes and cost overruns can result. In order to facilitate this and prevent unforeseen calls on cash from the property fund a contingency allowance is allocated to the development and is included within the facility agreement and cashflow.
- What is the Development Consultancy Service?
- Our Development Consultancy team will provide you with a professional and experienced ‘helping hand’ with your project. Our team is experienced in all areas of property development and will assist you from the point of inception right through to completion of the project. What is important for you however is that the project remains in your control at all times.
- We will review the strengths and weakness of the proposed project and provide input into the design of the scheme by our highly experienced sales team. They will give specific guidance on the proposed product mix, layout and also the specification.
- What Information Do You Need to Provide?
- In order for us to be able to assess your project it would be helpful if we could receive a copy of the following information: (please note all information will be treated in a confidential manner and will not be disclosed to any third parties).
- General Information
- A Background To Your Previous Experience
- Drawings
- Site Plan Defining Ownership
- Site Location Plan
- Proposed Site Layout
- Proposed Ground & Upper Floor Plans
- Specification
- Planning Permission
- A Copy Of The Planning Permission (Including Conditions)
- Sales & Marketing
- Sales Agent's Report Including Proposed Sales Value
- Financial
- Development Appraisal Including All Costs And Revenue
- Detailed Construction Costs
- Anticipated Cash Flow
- How is the Agreement Structured?
- You will be required to enter into a ‘Development Agreement’ with the Property Fund which will detail all the elements of the proposed project including:
- Maximum Facility Level
- Project Cashflow
- Contingency Allowance
- Security
- Profit Share
- What Security is Required?
- In order for the Property Fund to secure its investment it requires security on the land to which it is investing. A Charge in favour of the Property Fund is made on the land on completion of the Development Agreement.
- How is the Profit Split?
- In return for investing within the project the Property Fund requires a share of the profit made. Typically the Fund will expect a 50% share of the first 20% net profit made and then 10% share of any profit made above 20%.
- Who Monitors the Project?
- In order to report progress to the Property Fund, Assetz will carry out regular site inspections and attend regular meetings with yourselves to discuss construction, sales and financial matters.
- Where necessary Assetz will bring in independent advisors to assist.
- What other Services are Available?
- Utilising our sister company Assetz for Investors, we are able to offer you a sales outlet for your proposed project. Our team can advise on the product mix and specification of your project and also act as sales agents and accessing 1,000s of potential customers through our existing database.
- Will any Personal Guarantees be required?
- Personal guarantees will be required to cover any cost overruns which may apply to the project.
- How Long Will It Take To Approve An Application?
- We will approve the application within a week of submission of sufficient details. We target to have funding approved within 4 weeks.
- What Up Front Fees are there?
- We acknowledge that getting a development project off the ground is difficult and we therefore try and keep the up front fees to a minimum. We do have to cover our costs however and charges are determined as a percentage of the facility agreement agreed with the Fund. These charges are usually paid 50% up front with the remainder being able to be added to the facility and paid on first draw down from the facility. Generally fees are in the region of the following:
- Introduction Fee = 0% Free service
- Finance Arrangement Fee = 1% of Facility
- Valuation Fee = approx 0.1%
- Legal Fees = approx 0.5% of Facility
|
|
|
