There are a number of obstacles which clients need to be aware of when purchasing a site for development. The following points are important to consider:
Pre-planning & buying land
Pre-planning how you will purchase your site is crucial. Time may be of the essence so you may need a short-term finance solution to facilitate your purchase. Sometimes you may not have the planning permission to build your development on the purchase site before it is bought, so often a short-term finance solution is required until planning permission can be sought.
When buying land, it is crucial to conduct due diligence and research any hurdles that may need to be overcome with the future of your development. Unforeseen issues with your development may incur greater costs and diminish cash flow.
When deciding on a development site or property to purchase it is wise to know which properties lenders have traditionally been wary of funding. Determining factors for a difficult development property typically include, but are not limited to; location, type of property and eventual use of property.
The location of a property may cause issues – for example, if your development site sits on the edge of a green-belt area, some lenders may err on the side of caution when offering development finance.
The type of property being developed may also cause issues with potential lenders. If a site has been contaminated in the past, some lenders may not be willing to lend so it is important to carry out extensive background checks on the site before purchase.
Pending on the proposed use of your development site, certain hurdles may need to be overcome to convince lenders of your development’s suitability for finance. Hoping to avoid reputational damage, lenders will generally try not to lend to developments which will be used for activities such as gambling. Lenders may also avoid lending to higher risk developments, places of worship or stadiums for example.
Enness’ expert brokers are on hand to guide you at every step of the development process. With an abundance of experience within the sector, our expert advisors are able to steer site purchase in the right direction from day one. If you have any queries regarding your development purchase site needs, then please do not hesitate to get in touch.