CASE STUDY: A townhouse development matter
A developer had taken on a project to develop twelve townhouses in the Kent town of Tonbridge. As a result of the poor weather during the recent winter, the project overran but the developer was still required to repay his bank, who were becoming increasingly unhappy. However, the developer wanted to sell the property according to his timescale and on his terms, to ensure he did not make a loss and so approached his Financial Advisor to seek a solution.
Having taken a close look at the deal the advisor referred the case to TFC Homeloans due to their advanced knowledge in the specialist lending field. The case was assigned to an experienced Development Finance Specialist who secured funding from Octopus Property as they would offer a large loan size with a fast pay-out to fulfil the client’s needs. Octopus Property were happy to provide the funding necessary on review of the property and borrower, providing £4.075m of finance against a completed value of circa £6.7m.
Using their bridge-to-let product was a perfect solution as it allowed flexibility for the developer, enabling them to switch from a bridge to a medium-term buy-to-let loan, if required, without further underwriting.
As a result of the loan, the client didn’t have to accept a lower price for the townhouses, which would have set an inconvenient precedent for the rest of the units. It also allowed him to tenant some of the properties if he wanted, which most development funders won’t allow.