Development finance

The Nottingham provides Development Finance to support the build of new residential developments from the ground up. We offer competitive interest rates and fees, and the support of a team of experts. Our services are designed to support you across the entire development process, including selling your properties through our countrywide network of estate agency branches.

Min/Max Loan: £250,000 to £2,500,000.

Term: Maximum term 18 months.

Project type
We will lend on new build developments. We typically lend on projects using standard construction methods, such as brick and block, and timber frames. Our strong preference is for single family homes, either detached, semi-detached or terraced properties with gardens in high quality locations being built for sale, rather than as an investment/buy to let.

Borrower
Limited company, partnership or sole trader. We do not lend to offshore companies, clubs or associations or LLPs.

Security
Residential property being constructed in Nottinghamshire, Derbyshire, Lincolnshire, Leicestershire, Northamptonshire, Cambridgeshire, Bedfordshire and Hertfordshire. First charge on the freehold. For limited companies a debenture and directors’ guarantees are usually required, typically this is for 20% of the development costs. 

GDV limits: We will lend 60% of the gross development value.

Costs
Interest rate range 5%-9% p.a. above The Nottingham Building Society Commercial Mortgage rate; lending fee 1.5% to 2.5%; £500 plot release fee; valuation and legal costs.

Valuation:
The Nottingham will use a specialist valuer to act on our behalf.

Solicitors: The Nottingham will use one of our panel solicitors.

Monitoring surveyor
We will appoint a specialist panel quantity surveyor to produce the initial report, which will include an assessment of the development costs, the professional team, planning requirements and project viability. They will visit and monitor the development and provide us with certification to enable stage payment drawdowns.

Planning permission
We require detailed planning permission to be in place before release of development funding. The initial valuation report will comment on the likelihood of all terms of planning being met.

Fixed-price contract and collateral warranties

Where a developer uses a third-party contractor we look for a fixed-price contract and details of the experience of the builder. Where considered appropriate we may take collateral warranties (including step-in rights) to enable us to become part of the contract in the event of the failure of the developer.

Building warranty
For all developments it is our requirement that a developer/contractor should be registered with NHBC, Premier Guarantee, BLP, Buildzone, LABC, The Q Policy, Global Home Warranties or Zurich and have appropriate warranties in place.

Environmental surveys

Where there is a realistic possibility that current or former use of a proposed property may lead to or have had an environmental or contamination impact on either the site or its surrounds we will require a Phase 2 Environmental Report as part of the approval process.

Estate agency
It is expected that our estate agency services will be instructed for the sale of the completed properties. Please ask for more details.

Exclusions
The following are currently excluded under our Lending Policy:
  • Flat/apartment developments
  • Part completed developments
  • Leasehold properties
  • Commercial or part commercial properties
  • Cases where mezzanine finance is a feature, or the developer does not have a significant cash stake in the development
  • Cases where The Nottingham will be required to enter into a performance guarantee of any kind

Next steps

If you have a proposal which fits the above criteria, then please email development.finance@thenottingham.com.