ground up development

Ground Up Development: Bigger Reward on Investment

Ground Up Development has the potential to produce very high returns, but there can be considerable risks involved. Building from scratch – from the “ground up” – can be challenging and there are often several issues to face, from reduced liquidity to planning status.

Even before construction starts, developers face hurdles and difficulties with financing, acquisition, entitlements and permits. This can introduce risk factors into the business model that may lower your profits or worse, lead to the failure of your project.

We can help you take the first step in your new property development by guiding you through all the stages of your project to reduce the risks involved. While it can be a lengthy process, the returns on investment can be attractive.

Navigating the challenges

There are complex processes involved in negotiating Section 106 Agreements (S106) with local planners, as well as Community Infrastructure Levies (CIL) that can be demanded in some areas, creating technical, legal, and financing challenges.

The CIL is charged by local authorities on new development projects in the area, considering the infrastructures needed to support new land development. S106 Agreements are binding agreements with the local planning authority that create planning obligations for the developer to get the project licensed.

These obligations vary from flood defences to improvement of access or in residential land development projects, setting aside several units at discounted prices to reduce the impact of the project in the local housing market.

Despite these challenges, a Ground Up Development is appealing as it offers great flexibility and can be tailored to your exact needs. Developers can conceive projects to local market demands and see the project from beginning to end.

Compared to redevelopment, there is less construction risk involved, which can involve hidden costs, and new construction brings a wide range of personalised design opportunities.

Consider the pros and cons

Developers looking for land must consider all the pros and cons from the start of their projects, along with choosing to acquire properties with or without planning permission. Development land for sale with planning permission tends to be more expensive, prompting some investors to buy land without permission. 

Developers will consider whether an increase in value once planning permission is obtained by assessing precedents made by local councils or comparing (comps) GDV and market values on similar completed projects. However, the risk factor involved can make financing more difficult and it can take a good deal longer to get approved. 

So locating development land with planning permission for sale while more expensive can be worthwhile, as it allows you to start a development project without these application hurdles. 

How we can work with you

We have several initiatives that can aid in progressing Ground Up Development. With our variety of funding solutions, we help Developers to obtain loans for land development, with more established Developers benefiting from our valuable Corporate Advice when faced with a reduced liquidity issue arising from unsold completed projects. 

Our network of institutions, wealth funds, family offices and private lenders with an appetite for a variety of sectors such as: Residential Development, Private Rental Schemes (PRS), Build to Rent (BTR), Student Accommodation, Hotels, Retirement Living, etc can get you closer to the maximum funding needed to secure a site or property, from commercial land development to new property development. 

Developers looking to receive funding for larger deals in the UK, Western Europe, or the US when a bigger Capital Raise is required can benefit from our various loan products. We assist both Large and Small Ground Up Developers to deliver the necessary Capital Raise they require, whether it is for the acquisition of land/property or solely to build out the scheme. 

Your Financial Toolbox’s assist developers in gathering the relevant information, such as S106 planning, Granting of Planning Permission, Securing Sales / Exit Strategy, and other issues to get the projects to a decision stage to fund (DIP). The combination of our variety of financial products and solutions to assist Developers overcome the challenges of every project ensures a smooth and reliable process to ensure maximum success.

Contact us today to find out more.