Development Finance for Purchase & Build Costs
We are specialists in arranging development finance particularly for purchase and build costs in connection with residential or commercial property development.
Read on to find out more about how Development Finance works, what the lending criteria is and how you can convert residential properties into commercial or converting commercial properties into residential.
Short term funding
Development finance is a short-term funding option, usually for 6-24 months. It is explicitly designed to assist with the purchase and build costs associated with a residential or commercial development project.
Development finance interest rates start from as low as 4% per annum or around 0.34% per month. These are the best rates and the hardest to qualify for.
If this is your first development project, the lender will usually require you to contribute 50% towards the purchase of the land.
However, there are scenarios where lenders might be willing to let you borrow all the funds you need in Bristol even if you have no deposit.
Bristol City Council is the local authority of Bristol, England.
The council is a unitary authority and is unusual in the United Kingdom because a directly elected mayor of Bristol controls its executive function.
Bristol City Council has pledged to deliver 1,769 new affordable homes by 2027. We aim to use council-owned brownfields and derelict sites across Bristol.
The borough council is working with HM Land Registry to transfer its local land charges (LLC) data to a national digital register.
Most local land charges are restrictions or prohibitions on a property or land use, such as planning permissions or listed building status.
A search of the national register will reveal whether a property is subject to a charge and enable the buyer to make an informed decision about the purchase.
The transformation supports broader government priorities to make property transactions quicker, simpler and cheaper.
Converting from commercial to residential
Before 2015, there were restrictions on converting Bristol commercial premises into residential property
Now, it’s far easier to carry out commercial-to-residential development, and increasing numbers of property buyers are cashing in on the opportunities this conversion offers.
In 2015, the government announced significant changes to the General Permitted Development Order (GPDO).
This made it much more straightforward to change the purpose of a building from commercial to residential and gave developers more scope to create homes from unusual work premises in Bristol.
Many commercial buildings are now eligible to be converted to residential but are warned there are some potential exceptions. These include:
- Conservation areas or national parks
- Buildings within designated areas of natural beauty / scientific interest
- Listed buildings
- Safety hazard areas / explosive military zones
If you’re unsure, check before you commit to buying. Some examples above may be acceptable to convert but require full planning permission, plus some architectural drawings.
Additionally, the work might be required to be completed to a specific standard, and official guidelines may limit your design plans.
Local Authority Rules
There are also different sets of rules between various local authorities, with some having limited permitted development rights more than others.
All buildings in the UK are placed in a ‘use class’ as follows:
- A class – This includes shops, restaurants, and businesses that provide professional services
- B class – This includes offices, storage facilities and warehouses
- C class – This includes residential properties, and other places of habitation (e.g. hotels, care homes)
- D class – This is more miscellaneous and includes schools, doctor’s surgeries, cinemas and other leisure facilities
You will need to apply to change the use class to convert a commercial building into a residential property in Bristol
Note that this is not the same as seeking planning permission. You might not require planning permission to carry out the development work – this depends on what class the building was originally.
Some conversions don’t require planning permission, though you will still need prior approval from the Bristol local authority.
Examples are:
- Shops
- Retail warehouses
- Showrooms
- Light industrial premises
- Banks
- Professional services
- Hairdressers
Additionally, the buildings must be 150 square metres or smaller. If your plans include changing the appearance of the exterior (or extending the building), you may need planning permission after all.
The same applies if you want to alter the windows or move any doorways.
Before searching the market for suitable properties, it’s worthwhile working out exactly how much you can afford to spend on the conversion project.
This type of development work is known for its unexpected additional costs, so it’s worth over-budgeting to ensure you don’t spend more than expected.
As well as purchasing the property and funding the work, factor in the following costs:
- Planning permission application – £80 to £120
- Prior approval fee – £200
- Stamp duty tax
- Solicitor/surveyor costs
Other Considerations
You may also need to take on additional building work, such as soundproofing the property or providing it. with thermal insulation to make it suitable to live in. There are different ways to fund the conversion project in Bristol, Many developers select a mix of commercial and development finance options, usually incorporated into one convenient arrangement. Commercial-to-residential conversions offer a lot of profit, both in rental yield and in resale value.