27th February 2024
Development Finance for First Time Developers
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Social Housing Finance
At Mortgage Lane, our award-winning brokers specialise in social housing development finance. With real-world property investment experience, we deeply understand the financial solutions we offer. Whether you’re an experienced landlord or a first-time investor with unique credit challenges, our knowledgeable team is equipped to guide you effectively through your social housing project. Trust us to be your dedicated partner in navigating the social housing finance landscape.
PROCESS BREAKDOWN
1
Information gathering and advice
The first process in your social housing development finance application will be gathering or updating information in relation to the property, land, or yourself. Once this has been established your expert development finance broker will make a product recommendation.
2
Credit approval
Once you are satisfied with the product recommended and have confirmed to proceed, this will usually be submitted the same day to give you a decision, Once the lender has approved the deal, we can instruct the surveyor and quantity surveyor, or asset manager.
3
Underwrite, valuation and QS sign off
Once the application is submitted, your valuation will be booked in and most of the time (depending on the lender). This will usually completed once your initial underwriting has been completed. Once the valuation is returned as well as the Quantity Surveyors (QS) report, if acceptable, the lender would then look to make a formal offer. You can then move to legal stage.
4
Offer and completion
Once you have had your development finance offer, you will require adequate legal advice and then once you’re happy, your solicitor can draw this down once the legal requirements are satisfied. Your broker at Mortgage Lane will always be checking in on the application post offer, so we are chasing for you too!
Experts in Social housing development finance
At Mortgage Lane, we excel in social housing development finance, supporting both seasoned property investors and newcomers embarking on social housing projects. Our collaboration with competitive lenders ensures swift and efficient transactions, ideal for meeting tight deadlines typical in social housing ventures. Trust us to navigate the complexities of your project with sophisticated financial solutions. Specialist scenarios:
- High rise apartments
- Commercial to residential
- Part built schemes
- Modular builds
- Restricted covenants or use
- Adapted properties
Finance for group up social housing schemes
At Mortgage Lane, we specialise in providing social housing development finance for ground-up development schemes. Our expertise lies in understanding the unique challenges and opportunities of building social housing from scratch. We offer tailored financial solutions to make your vision a reality.
Key Features of Our Social Housing Development Finance
Loan to Gross Development Value (LTGDV): We typically provide loans up to 75% of the LTGDV. This financing structure is designed to give developers substantial leverage, making significant portions of project costs manageable.
Joint Venture and Equity Products: We understand that each project has its unique needs. That’s why we offer joint venture and equity products, providing more flexible financing options that align with your project goals and financial situation.
Flexible Terms: Our loan terms range from one month to five years, ensuring that we can accommodate the varying timelines of different social housing projects.
Adverse Credit Acceptance: We believe in opportunities for all, which is why we also accept applications from those with adverse credit histories. We evaluate each project on its merits, ensuring fair consideration.
Competitive Rates: Our interest rates start at 7% per annum, offering competitive financing solutions for your social housing development.
No Upfront Fees: At Mortgage Lane, we prioritise transparency and affordability, which is why we do not charge upfront fees for our social housing development finance services.
2nd Charge Mezzanine Funding: For additional financial leverage, we offer 2nd charge mezzanine funding. This option can be particularly useful for developers needing extra capital beyond primary financing.
Our Approach
At Mortgage Lane, we pride ourselves on a client-focused approach. We understand that developing social housing is not just about building homes; it’s about creating communities. Our team works closely with each client, ensuring that we understand your project’s specific needs and objectives. We aim to provide not just financing, but solutions that contribute to the success of your social housing development.
Conclusion
Whether you’re embarking on a new ground-up social housing project or expanding your existing portfolio, our social housing development finance options at Mortgage Lane are designed to support your goals. Contact us to discuss how we can assist in bringing your social housing project to life with our bespoke financial solutions.
Finance for Green Social housing Developments
Green Social Housing Development Finance with Mortgage Lane
Leading Brokerage for Eco-Friendly Social Housing Projects
Mortgage Lane is a leading broker in the UK, specialising in connecting developers with lenders who offer finance for green social housing developments. We are dedicated to supporting projects that not only address housing needs but also prioritise environmental sustainability.
Our Role in Facilitating Social Housing Development Finance
Access to Specialised Lenders: We connect you with lenders providing up to 75% Loan to Gross Development Value (LTGDV) for eco-friendly social housing projects, ensuring robust financial support for your sustainable development goals.
Diverse Financial Products: Our extensive network includes lenders offering joint venture and equity products, enabling flexible financing for green social housing.
Flexible Loan Terms: We facilitate loan terms ranging from one month to five years, catering to the varied timelines of eco-conscious housing projects.
Inclusive Financing Solutions: Understanding diverse financial backgrounds, we work with lenders who consider applications even from clients with adverse credit histories.
Competitive Interest Rates: Through our network, we offer interest rates starting at 7% per annum, making sustainable projects more attainable.
Enhanced Funding Options: We can also facilitate 2nd charge mezzanine funding for additional financial leverage in your green development project.
Championing Energy-Efficient Housing
We guide developers in securing finance for creating homes with an Energy Performance Certificate (EPC) rating of A-C. An EPC rates a property’s energy efficiency, and achieving a rating of A-C is crucial for meeting upcoming UK regulatory standards. By April 2025, all new tenancies must comply with this EPC requirement, and by April 2028, it extends to existing tenancies
Mortgage Lane’s Expertise in Green Development
Our expertise lies in understanding the nuances of green development in social housing. We navigate you through the lending landscape, ensuring your project aligns with both your development aspirations and the imperative for sustainable, energy-efficient housing. With Mortgage Lane, you gain a partner who understands the significance of environmental responsibility in social housing and has the resources to support your vision
Conclusion
Embarking on a green social housing development project requires a partner who can bridge your ambitions with the right financial resources. Mortgage Lane is that partner, offering unparalleled brokerage services to connect you with the ideal lenders for your environmentally sustainable housing projects. Reach out to us to explore how our expertise can turn your green development vision into a reality.
Finance for social housing conversions
At Mortgage Lane, we recognise the growing need for innovative solutions in social housing development finance, particularly for conversion projects. Our expertise in providing bespoke financing options caters to developers who are transforming existing buildings into vital social housing.
Comprehensive Social Housing Development Finance Features
Loan to Gross Development Value (LTGDV): We offer loans up to 75% of the LTGDV for social housing conversion schemes, providing substantial support for your project’s funding needs.
Joint Venture and Equity Products: Our diverse range of financial products includes joint venture and equity options, giving developers flexible ways to finance their conversions.
Versatile Loan Terms: With terms ranging from one month to five years, we accommodate the varying timelines and phases of social housing conversion projects.
Inclusive Financing: Understanding the challenges in the financial journey, we accept applications from clients with adverse credit histories, assessing each project on its unique merits.
Competitive Rates: Starting at 7% per annum, our rates are designed to offer cost-effective financing for your social housing development.
2nd Charge Mezzanine Funding: For developers seeking additional capital, we provide 2nd charge mezzanine funding, enhancing your financial leverage for the project.
Refurbishment Loans for Economical Conversion
In social housing conversion schemes, refurbishment loans are often a suitable choice, especially for projects that require intricate project management. These loans typically come with more economical fees and involve asset managers instead of quantity surveyors, offering a streamlined approach to managing the conversion process.
Our Approach at Mortgage Lane
Our team at Mortgage Lane is dedicated to understanding the specific needs of your social housing conversion project. We believe in building more than just houses; we’re helping to create sustainable communities. By working closely with you, we ensure that our financial solutions align perfectly with your project goals, contributing significantly to the success of your social housing development.
Conclusion
If you’re undertaking a social housing conversion project, Mortgage Lane is here to support you with tailored social housing development finance solutions. Reach out to us to explore how we can assist in successfully financing your conversion project, leveraging our expertise and comprehensive financial options.
Housing groups and charities
At Mortgage Lane, we specialise in social housing development finance for housing groups and charities, offering a range of financial solutions designed to support the unique needs of organisations dedicated to creating affordable, sustainable, and community-focused housing.
Tailored Finance Options for Social Housing Projects
Loan to Gross Development Value (LTGDV): We offer loans up to 75% of the LTGDV, ensuring substantial support for your housing projects.
Joint Venture and Equity Products: Understanding the diverse funding needs, we provide various joint venture and equity options, offering flexibility and tailored financial structures.
Adjustable Loan Terms: Our terms range from one month to five years, accommodating the different stages and timelines of social housing developments.
Competitive Rates: With interest rates starting at 7% per annum, we aim to make social housing development financially viable and accessible.
2nd Charge Mezzanine Funding: For additional capital requirements, we offer 2nd charge mezzanine funding, broadening your project’s financial base.
Supporting a Variety of Housing Groups and Charities
Our services cater to:
Housing Associations: We assist housing associations in accessing finance for the expansion and development of affordable housing options.
Care Providers and Housing Co-operatives: We support both emerging and established groups dedicated to creating nurturing communal living environments.
Land Trusts: Our focus extends to financing land trusts that prioritise sustainable, community-led housing projects.
Community Self-Builders: We finance local communities in their endeavours to self-build their homes, fostering a sense of ownership and community spirit.
Variety of Property Types Eligible for Financing
Mortgage Lane has expertise in financing a diverse range of property types within the social housing sector, such as
Live/Work Units: We finance spaces that smartly combine residential and commercial functionalities.
Standard Builds: Our financing covers traditional construction methods, supporting conventional housing projects.
Eco-Friendly Buildings (EPC Rating A-C): High-efficiency, environmentally friendly properties.
Innovative Construction Methods: This includes modern methods like timber frame/clad or steel frame constructions.
Earth Sheltered Dwellings: Unique homes integrated into their natural surroundings.
Non-Traditional Constructions: Unique building styles such as straw bale, thatch, rammed earth, wattle and daub constructions.
Insulated Concrete Forms and Structured Insulated Panels: Advanced materials offering energy efficiency and durability.
Conclusion
Mortgage Lane is dedicated to supporting housing groups and charities in their pursuit of building affordable and sustainable communities. Our expertise in social housing development finance ensures that we can provide comprehensive and customised financial solutions for a wide range of housing projects. Contact us to discover how we can assist in financing your next social housing development, empowering you to make a lasting impact in your community.
Social Hosing Finance Eligibility
Social housing development finance offers a strategic solution for funding your project, with lenders typically providing up to 75% Loan to Gross Development Value (GDV). This often covers 75% of the purchase and 100% of the build costs, funded in arrears. These finance options cater to both light and heavy social housing developments, accommodating various levels of developer experience. Whether your project aims for modest enhancements or extensive reconstruction, social housing development finance can align with your project’s profitability and funding requirements.
TRY OUR Social Housing Development Finance CALCULATOR
ABOUT SOCIAL HOUSING DEVELOPMENT FINANCE
Why are local searches critical for land purchases, especially in the context of social housing development finance?
Local searches are a key component in land transactions, particularly for projects involving social housing development finance. They provide essential information on planning permissions, legal restrictions, and other local authority records that might affect the land. This information is vital for assessing the feasibility and potential risks associated with social housing projects and is often a prerequisite for securing development finance.
What specific insights do local searches offer for social housing development projects?
For social housing development finance, local searches can uncover zoning laws, existing or proposed local developments, environmental concerns, and access rights. This information is crucial in evaluating the land’s suitability for social housing projects and in planning your development strategy.
Can a land purchase for social housing development proceed without local searches?
Technically yes, but it’s highly inadvisable, especially when social housing development finance is involved. Skipping local searches could mean overlooking potential issues that could have significant financial and legal implications on your social housing project and its funding.
How are local searches initiated for social housing development projects, and who conducts them?
Your solicitor typically initiates and conducts local searches as part of the land purchasing process. This step is especially important when you’re aiming for social housing development finance, as it forms a critical part of your funding application and project planning.
How does the Loan to Gross Development Value (LTGDV) affect the interest payable?
As the Loan to Gross Development Value (LTGDV) ratio increases, so does the interest payable balance. This is because the interest is calculated on the growing loan amount. The interest and loan balance grow in a linear manner alongside the increase in the Gross Development Value (GDV) of the scheme.
How does adding the product fee and interest to the loan impact the total cost of the loan?
By adding the product fee and interest to the loan, the initial loan amount increases. This means that over the loan term, the borrower ends up paying interest on a larger principal, which increases the total cost of the loan.
What should developers consider when evaluating the impact of interest payments on their social housing project?
Developers should carefully consider the total cost of the loan, including capitalised interest, when planning their social housing project. It’s important to evaluate the project’s feasibility with the increased loan amount and to ensure that the final LTGDV ratio remains within viable limits.
Do I need experience for social housing development finance?
At Mortgage Lane, we understand that everyone has to start somewhere. While some of the more competitive lenders may prefer borrowers with development experience, especially for complex projects, it’s important to know that many lenders do not require previous experience for social housing development finance. This includes projects that involve significant renovations or construction work. We’re here to guide you through the process and find a lender that aligns with your specific circumstances and project needs.
Minimum income for a social housing development loan?
When it comes to obtaining social housing development finance through Mortgage Lane, having a regular income is not necessarily a requirement. However, lenders will conduct a comprehensive review of your exit strategy. If your strategy involves refinancing the property upon completion of the development, they will evaluate your income to ensure it meets the criteria set by potential remortgage lenders. This process is essentially a ‘sense check’ to confirm that your income levels are compatible with the terms of remortgage options available. If you exit is sale then the lender will rely on assessing expected Profit on Cost (POC) levels.
Can I get a social housing development loan with adverse credit?
Just as with traditional mortgages, there are lenders within the realm of social housing development finance who consider applicants with adverse credit histories. This means that even if you have experienced missed payments, County Court Judgments (CCJs), defaults, or even an Individual Voluntary Arrangement (IVA), we at Mortgage Lane can assist you in finding a suitable lender for your refurbishment loan needs. For those who have been discharged from bankruptcy, the range of options typically improves after 3 years, and further still after 6 years.
In the case of social housing development finance, it’s important to note that lenders often adopt a ‘non-status’ approach in their underwriting processes. This means they focus more on the profitability potential of the development project and the viability of the exit strategy, rather than solely on the applicant’s credit history. This approach can provide opportunities for developers with adverse credit to secure the necessary financing for their projects.
Do I need a minimum income for a social housing development loan?
No, a minimum income is typically not a crucial underwriting requirement for a social housing development loan. Since these schemes are often pre-sold or sold after completion, lenders focus less on the borrower’s income and more on the project’s profitability. Key financial aspects like the profit on cost, Loan to Gross Development Value (GDV), and Loan to Cost (LTC) are what lenders primarily consider to assess the economic viability of the social housing development.
Where do you broker Social housing development finance in the UK?
We assist our clients with social housing development finance in England, Wales, Scotland, and Northern Ireland.
Is it mandatory to conduct local searches when seeking social housing development finance?
While not legally mandatory, local searches are usually required by lenders when it comes to social housing development finance. These searches ensure that the land is suitable for development and free from any issues that could jeopardise the project or its funding.
How do local searches impact the process of securing social housing development finance?
Local searches are a significant part of the due diligence process for lenders in social housing development finance. They provide lenders with the assurance that their investment is secure and the land development is viable. Negative findings in local searches can affect loan approval, terms, or the overall feasibility of the project.
What should I do if local searches reveal problems, considering my aim is social housing development?
If local searches identify issues, it’s crucial to evaluate their impact on your social housing development plans. Discuss the findings with your solicitor and lender to understand the implications for your development finance and explore possible solutions or alternatives.
How is interest charged on a development loan?
Q: What is the typical approach to interest payments in social housing development finance?
In social housing development finance, most lenders add the product fee and the interest for the loan term to the loan amount. This means the interest payable, along with the product fee, is capitalised and included in the loan balance, rather than being paid periodically.
Is there a typical maximum LTGDV ratio that lenders consider for social housing development finance?
Yes, typically, lenders in social housing development finance are cautious about the LTGDV ratio. Most lenders will not provide financing for schemes that require an LTGDV of more than 75%. This is to manage risk and ensure the loan amount does not disproportionately exceed the value of the completed development.
Can developers pay the interest periodically instead of rolling it into the loan?
The option to pay interest periodically depends on the lender’s terms. Some lenders may allow periodic interest payments, but this is less common in social housing development finance where interest is typically rolled into the loan.
Are there any strategies to mitigate the impact of interest payments in social housing development finance?
One strategy to mitigate the impact is thorough project planning to ensure timely completion, which can reduce the total interest accrued. Additionally, exploring government incentives or subsidies for social housing might provide more favourable financing terms.
Will a refurbishment loan fund 100% of works?
Yes, it’s certainly possible for some development loans to fund 100% of the works cost. However, this is typically subject to the condition that the gross loan does not exceed around 75% of the project’s end value or Gross Development Value (GDV). In addition to this measure, lenders usually require a minimum contribution from the borrower, often termed as ‘skin in the game’. This contribution, which can range from 5-10% of the project cost, reflects the borrower’s commitment and can be in the form of funds or equity.
In lender’s terminology, the Loan to Cost (LTC) ratio should ideally be no more than 90-95%. It’s worth noting that some lenders may allow this equity contribution to be provided by a private investor.
Lenders also pay close attention to the project’s profitability. For instance, they may have a minimum required ‘profit on cost percentage’, such as 15%. Provided these financial measures are met, lenders may agree to finance 100% of the work costs, payable in arrears.
For example, if your project involves work totalling £100,000, the funding is typically split into phases. With many lenders setting a minimum drawdown amount (commonly around £25,000), your project might be structured into four drawdowns of £25,000 each. It’s important to remember that each drawdown will incur professional fees. Therefore, maximizing drawdown amounts can help reduce the overall cost of borrowing.
In practice, applicants usually forward fund their schemes or arrange for their builder to finance the initial phase, often under a JCT or minor works contract. At Mortgage Lane, we’re here to help navigate these options and find a solution that aligns with your project’s financial requirements and goals.
What is the term of a social housing development finance loan?
The terms for social housing development finance typically range from 1 to 60 months, providing flexibility to accommodate various project timelines. While these loans are an essential cost of conducting business in property development, many developers, considering the potential for profit, aim to exit these financial arrangements as promptly as feasible.
For social housing development finance, lenders often set a minimum term ranging from 1 to 3 months. This means that once your development project is complete, you have the ability to exit the financing arrangement shortly thereafter, typically immediately following the minimum term period. This aspect of social housing development finance offers a degree of flexibility to developers, allowing them to plan their exit strategy in a way that aligns with their project completion and financial objectives.
What is a closed legal panel?
In the context of social housing development finance, specialist lenders often employ a closed legal panel. This means they specify a list of solicitors who are authorised to represent them. When seeking finance, you would choose from this list for legal representation. Joint representation, where the selected solicitor’s firm represents both the lender and you, is sometimes an option. However, some lenders on a closed panel may only offer sole representation for themselves, in which case you can choose your own solicitor separately, provided they meet certain criteria. It’s important to note that in cases of sole representation, you will be responsible for paying two sets of legal fees – one for your solicitor and one for the lender’s.
What entities can take out social housing development finance?
We arrange cost-effective social housing development finance for:
- Individuals
- Special Purchase Vehicles/Limited Companies
- Limited Liability Partnerships (LLP)
- Trading companies
- Charities
- On/Offshore Trusts
Is social housing development finance regulated?
It is important to note that social housing development loans are not covered by the Financial Services Compensation Scheme, so borrowers should ensure they are dealing with a reputable lender.
Learn more about mortgages with Mortgage Lane
At Mortgage Lane, we see the most complex of social housing development finance applications, some of which make a good read for investors looking to learn from other applicants challenges, or for those effected by the topics! See more refurbishment loan topics covered in our blog here.
FINANCE YOUR SOCIAL HOUSING SCHEME!!!
Let us know about your enquiry and one of the team at Mortgage Lane will be in contact to assist!