Case Study: Thirsk, Sowerby - £422,500

Details: 66% LTGDV for development finance with the project completed in September 2019

This was a very interesting case as the developers had varying experience within the sector, having completed a number of property developments, primarily focused on residential redevelopment. However this development was set to be their first ground up development. To add further complications, the project was being undertaken in a conservation area.

The developers purchased the land at auction and were able to purchase approx 10% under guide price. This was good news for their development costs, as the goal was to build two 4 bedroom properties that retained the conservation area characteristics. The properties were to be joined to an existing highly conserved residential terrace row. Once competed they would be valued at a guide price of £320,000 each.

Mint Bridging were approached to fund the development of the properties. Following our due diligence on the developers there were no reservations regarding this being their first ground up. Given our experience dealing with such borrowers, we viewed this as the natural progression into heavy development, a feat our clients regularly take.

Mint provided an initial loan of £340,500 over 12 months, with a day one draw down of £106,000 - the security being the development land, and an additional charge on an existing property. While the build schedule predicted a build time of 9 months, Mint looked to add further flexibility within the deal, providing a period of 3 extra months to sell the property. As their exit from the loan was based on the sale of the properties we wanted to provide a good period of time to sell post-build, should this first time project run over. This was purely precautionary for the borrower, as were they to sell sooner there would be no early redemption fees to pay.

With both the lenders continuing to work their primary jobs full time and instructing a construction company to undertake the work, the relationship between developer and Mint’s internal project managers was key. From Mint's perspective, this was the important part of the relationship when it became clear that the development was not going to complete when intended.

Mint were able to work with the lender to extend the loan term by an additional three months. We also provided additional funds, in order to further expedite the delivery and cover shortfalls in the construction budget.

The project has now completed and the results are fantastic. The newly constructed development seamlessly adopts identical characteristics of the properties, within this highly conserved residential area. The project is also testament to the lender and their appetite to increase their portfolio with such a challenging milestone.