A competent and enthusiastic young developer assembled a site over a two year period by acquiring adjoining properties and gaining planning consent for demolition and replacement with a block of 23 two-bedroomed apartments.
The site is located in a desirable suburb of Birmingham. The construction programme was a success but the forecast sales were affected by the changing marketplace.
As sales were very slow it was agreed that, in order to assist the customer in obtaining alternative funding to repay the loan, the repayment date would be extended by eight months and the units would be rented. The units were quickly filled with tenants and the rental income is used to cover the accruing interest. Following successful letting of the units, the customer was able to obtain long term refinance.
Loan: £1.9 million
Loan to value: 60%