Property Development Finance For Regeneration

Arranging Property development finance for projects
in inner city areas is getting easier as more lenders
are waking up to the idea that excellent profits can
be made by helping property developers in regeneration
areas.

Areas of cities that are run down but in good central
location often present good investment opportunities,
especially if they are surrounded by more upmarket areas
which are already popular places to live. In these
regeneration areas property can be found at very
reasonable prices, often up to 10% to 20% lower
than in the fully developed area of the city.

However investors still need to do some careful
research and check there is a well-funded regeneration
plan in place. Areas such as Stratford East in London,
parts of Manchester and inner city areas of Bristol
all have regeneration schemes in place and are proving
irresistible to investors and buyers. A good example
of the perfect regeneration project would be an area like
Stratford in London with the 2012 Olympics being hosted
in the area.

Demand for property development finance in regeneration
 areas is exceeding all records with property developers
eagerly snapping up brownfield sites. It is far easier to
develop a brownfield site than to try and get planning
permission on greenfield sites. The location of brownfield
site makes property development funding more attractive as
they are already in prime locations for amenities such as
shops, cinemas, bars and employment.

Planing restrictions on greenfield sites means that
regeneration is the way forward. Finance for property
development in these areas is very often geared to the expected
increase in value once the whole site has been finished.
Although far more care is taken by the lender when researching
the risk involved in this type of property development. Thorough
investigation of the local regeneration plan will be carried out
by the lender to ensure the project falls within the local
planners requirements.

Mortgage lenders have improved their product offerings to
accommodate the inner city type of property, this includes
helping property developers arrange mortgages for residential
dwelling situated above commercial premises. In particular the
buy-to-let mortgage has really come into its own in this
environment. It is not unusual to see an entire development of
apartment being snapped up by investors before the project is
even ready for viewing.

When researching the property development finance options
available it is vital that the builder tries to use a specialist
broker. The mainstream residential mortgage broker is sometimes
tempted to dabble in commercial finance, usually attracted by
the idea of large commissions. In reality arranging finance for
property development is a highly skilled job, and relies on
experience and personal contacts. Property developers trying to
arrange finance for regeneration projects are also well advised
to try to use local brokers wherever possible, this is because a
local broker is more likely to know of any regional issues which
may adversely affect the project.

Central government funds, the EU and local authorities all
often try to encourage regeneration schemes with subsidies and
grants. Very often a scheme will be enhanced by the provision of
improvements to local schools, hospitals and transport links. In
order to capitalize on positive publicity there will often be
some media interest in these announcements, it is worth
following these stories carefully.

Bridging finance is another tool for the developer to use,
particularly useful if property development finance can not be
raised because of planning problems. Bridging lenders can help
fund the purchase of a site prior to planning permission being
granted. The developer can then take advantage of the increased
value when arranging the property development mortgage.

About The Author: Find out more about
http://www.s-b-f.co.uk/Property.htm property development finance
by talking to a commercial finance broker. Spectrum Business
Finance have been arranging bridging finance property renovation
for over 5 years and have the experience to accommodate most
circumstances.