Bricks and mortar has long been seen as a prudent way to invest with the phrase ‘an Englishman’s home is his castle‘ revealing just how deeply property is entrenched in the British psyche. There are now over 2.5 million property investors in the UK, as more and more people consider property development as an affordable and dependable short- or long-term investment for their future.
Here we look at the three most popular types of property development projects that we see Blend Network borrowers do.
- Improving the rental yield on a property
Purchasing residential property which is run-down and in need of modernisation, or which can be profitably extended or sub-divided, can deliver worthwhile capital gains. Our borrowers know this well and this is the chosen strategy for many of our property developers and investors. Some of the successful ground-up building projects we have funded at Blend Network are the Gosford Park, Market Street and Humber Avenue projects. In all these projects, loans were funded within minutes and we were able to lend up to 75% of the Gross Development Value (GDV) including rolled-up interest.
The key to this strategy is location and building a product aimed for the target audience. Many of our borrowers like the saying ‘buy the worst house in the best street’ and look for the next up-and-coming area, on the borders of the suburb or streets already in high demand. For a rental property and Houses of Multiple Occupation (HMOs), they choose locations that have good transport links or are close to major employment hubs such as hospitals or universities. Also, the aim of the renovation, to sell or to let out, will determine the design and fit-out decisions.
- Converting commercial property to residential
Despite the structural housing shortage, the UK’s towns and cities still have under-tenanted and disused office blocks, factories, garages and retail spaces. Local authorities are keen to support planning permission for those commercial properties to be converted into residential. Indeed, many warehouses and Victorian factories offer solid build and generous proportions that give scope for very imaginative and profitable upmarket conversions.
Some of the successful commercial-to-residential conversion projects we have funded at Blend Network are the Stag Inn and Crown House projects.
- Ground-up developments
Some of our more experienced borrowers focus on ground-up building projects. We at Blend Network do not take planning risk, so the ground-up building projects we decide to fund all have detailed planning consent. The reason is simple: we are lenders and not equity investors and planning is more of an equity game rather than a debt game; obtaining planning can take 3 month or 30 months and that is something out of our control, so it is a risk we are not willing to take.
Some of the successful ground-up building projects we have funded at Blend Network are the Bayswater Homes, Efficient Utility and County Down projects.
In all the projects funded by Blend Network, staged draw-down development finance allows the developer to borrow the agreed funds they need as-and-when they need them, so they’re not paying interest on money until they need it. If you have a deal that you are looking to fund, send us an email at enquiries@blendnetwork.com or give us a call at 020 3409 3300. We are here to talk!
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