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hi tony we also run a small development company building houses and refurbs but find it difficult to get funding at the right rates .do you know lending houses that are charging lower rates then 1.2 per month regards david

Reply to the comment left by "robert robertson" at "12/11/2014 - 21:31":

Malcolm Jones arranges development funding regularly at much cheaper rates than that - see his member profile here >>> http://www.property118.com/member/?id=3353
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Reply to the comment left by "robert robertson" at "12/11/2014 - 21:31":

Hi Robert, You don't say what LTV you are looking for, but if you are looking for 50-60% of gross development value, there are plenty of lenders who offer better than 1.2% pcm, plus I presume there are charges going in and out. 1.2% is a credit card equivalent! I would suggest:

1) Look in Housebuilding and Renovating Magazine, or its website, as lenders to self-builders also lend to small builders and developers. Buildstore, for example, will loan to small developers: try Michael Cartwright 01506 409276.

2) Small banks like Aldermore. They recently gave me ballpark figures as follows:
- 8% fixed interest p.a.
- minimum profit expectation 18%
- loan size up to 75% of costs, with interest rolled over
- Fees: 2% of loan going in, 2% coming out (ouch!)

3. Regular banks are better too. Lloyds recently gave me the following ballpark figures:
- interest rate 5.5%-6% p.a. over BBR
- minimum profit expectation 20%
- Up to 50% on land, including implied value of land already owned and without planning permission. LTV on land with permission varies up to 50%: basically its whatever percentage will get you a gross 20% profit margin.
- 60% LTV on construction
- Fees: 1% of loan going in (if over £1 million), otherwise 1.5%
- no exit fee

Nat West was:

- interest rate 3.6% p.a. over BBR
- minimum profit expectation 20%
- loan size: up to 50% GDV or 60% of costs (land, construction etc)
- Fees: 1.25% of loan going in, 1.25% going out

hi tony thanks for the info i will look in to this intresting to see that thebanks are back in the mix regards rob

Reply to the comment left by "robert robertson" at "13/11/2014 - 19:14":

Hi Robert

The banks really are back in business and have been for a while. However, you wouldn't know it if you don't know the right people in the banks because they rarely communicate with each other. The people you need to speak to are labelled "Hunters" - it's explained very well in this article >>> http://www.property118.com/which-commercial-lenders-are-hungry-for-business/37392/
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Hi Tony, Do you know ball part figure per sq m for converting office/large house into flats. Looking at project at present that is office space into flats.
Regards
Robert

Reply to the comment left by "robert robertson" at "16/11/2014 - 10:26":

Hello Robert, No idea. So much depends on the size and nature of the existing structure: is it a converted Victorian property, or a 1950s commercial build with loads of asbestos, or a relatively new steel construction? You may need loads of fire and sound insulation, you may have serious issues with retro-fittings lots of bathrooms and getting the waste away, or you may need a lift.

I suggest you pay a quantity survey with experience of these conversions to do you an estimate. Or ask a local developer that's doing a similar project whom they have used for construction estimates. Rectory Homes, for example, are currently converting a medium-sized office building in Wenman Road, Thame into 46 one- and two-bed flats: see South Oxfordshire DC planning application P13/S3023/PDO.

Reply to the comment left by "Tony Atkins" at "05/11/2013 - 16:34":

Hi Tony,

I was wondering if you could help with advice.

I bought recently a freehold 3 bed large Edwardian maisonette in Enfield, London, with a huge passageway so that when you come up the stairs as its first floor, you get that sense of serious space. I had two batherooms in this property so converted one into a bedroom to create a 4 bed flat. As the flat has its own large garden and off street parking for 1 car, it compares in size with any medium sized house as it has 4 beds, reception/diner all in one and good sized kitchen and batheroom. Here is my dilema, the flat has a large loft space and I am able to create a self contained studio or 1 bed flat of 52 square metres. Where my problem is is that if I create a flat in the loft, I reduce the passage space which is a great feature of the flat as it is currently enormous plus I turn the current flat I had from having its own entrance to now a self contained main shared entrance. Surely this will reduce the value of my original flat?

Let me throw some numbers at you to see what you think.

Maisonete bought recently for 276K

Build costs for flat in attic is 80K to include kitchen and bathroom, finished product.

Infrastruce tax 20K

Miscellaneous/loss of rent while works going on 10K

Loss on current flat due to passage space lost (due to loft flat) and own exclusive entrance lost say 20K

Total = £130K

Now My problem is this, studio flats ( not in attics as they are less desirable) sell for around 130K and 1 beds probably sell for 150K ish. With this in mind I cant see a great profit in doing this deal or am I missing something here that a great property developer would have spotted?

I also have the issues of a tittle split for the self contained flat, would I need that? Or would the 4 bed and 1 bed combined be as valuable as opposed to on seperate tittles? I ask this because I want to refinance and get the money released from the flat created in the loft but would lenders discriminate?

At times when I consider all this, I just feel like renting the property as 4 bed which I will get 1700 a month and just leave it at that and get satisfaction in creating 1 extra bedroom and creating value that way. The loft space has thrown me into a whole area of mental confusion.

What would you do Tony?

Many thanks in advance

I agree, Peter - there doesn't seem much profit in this.

Is the construction figure of £80K accurate and from a builder who knows what he's doing? In my experience the creation of a new flat in an old property usually costs much more than you expect, because of the very onerous building regulations as regards fire and noise protection, both in floorspaces and around staircases to a second storey.

I am also surprised by the £20K in infrastructure taxes: is this S106 or CIL? Normally S106 is quite lenient on small units, as they can't charge you much for education contributions for example.

I would also check what an estate agent thinks about the damage to the maisonette valuation caused by forcing it to have a shared entranceway. This might be worthwhile in an urban location but in suburban Enfield you may be damaging your value, not enhancing it. You need professional advice. I suspect you will create more value just by creating an extra bedroom on the main property.

You would need a separate leasehold title for the attic flat, if you wanted to sell it but keep the maisonette.

Overall I would say it should be worth creating an extra bedroom with ensuite bathroom for the maisonette, but keep your life simple and go no further than that: you'll have considerably reduced construction costs, no infrastructure tax to pay, and the property will still be a self-contained unit with its own entrance. Or if you make a good rental profit on the property as it stands, why not just hang onto your cash and consider buying another property instead, if you want to expand and think the long-term capital gains look attractive?

Hi Tony, you are an absolute star, thanks so much for your detailed reply and I really appreciate your advice. You have cemented my decision not to go ahead with the loft conversion to a flat.
I have one last question on this subject please. Keeping in mind I never ever plan to sell the property, just refinance as much as I can then do you think there's value in just obtaining the planning permission and sitting on it? Do you think it would increase the valuation for re-mortgage purposes, particularly as consent is temporary in it's nature ?
Once again, I can't thank you enough for your articulate and illuminating opinions.
Thanks, Peter