Residential Developments
CLP have many years experience in arranging residential development finance.
In times of high demand lenders are prepared to take a positive approach to a well researched construction loan.
However when the market is difficult development loans are one of the first markets to become very restrictive due to both construction risk and lack of demand.
The three fundamentals are:
- Experienced and financially strong developers
- Construction risk supported by a financially strong contractor
- At the very least a strong demand but more likely a guaranteed exit provided by arms-length pre-sales (see our CLP E Plan)
Specialist development areas - the market's view:
1. High-End Residential Properties
There are one or two specialist lenders only, who understand this market. The level of client equity contribution, the location combined with experience and track record will determine whether it will get lender's support
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2. Social Housing
Unlikely to be an entire development as HAs tend to carry these out themselves. Their financial strength is considered as prime so any development partially or wholly prelet or presold to an HA will be well received by lenders.
3. Student Accommodation
This is considered to be a growing demand area for lenders in established locations.
Development substantially pre-committed to a University or Housing Association are the most attractive to lenders; followed by experienced private sector accommodation block developers and managers.
Certain lenders will support the development of street houses / apartments in the right locations.
Certain lenders will support the development of street houses / apartments in the right locations.
4. Sheltered Housing and Care Homes
The financial strength and track record of the operator is key to obtaining lenders's support.
Whilst many lenders are becoming comfortable with this market, there is a reluctance to support any project without a quality operator.
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