Loans for building a new house in the UK

How to Secure Land for Building a New House in the UK

Building a house starts with finding the right plot of land. Whether you’re constructing a single property or multiple units, securing the land is a critical step in the process. Here’s what you need to know:

1. Research Locations and Market Demand

Start by identifying areas with strong demand for rental or sale properties. Look for locations with good transport links, amenities, schools and employment opportunities. Understanding the local market can help ensure your investment is profitable. Don’t just follow the herd, do your own research.

2. Check for Planning Permissions

Before purchasing a site, verify its planning permission status. Some plots come with pre-approved planning permissions, while others may require you to submit an application. Engaging a planning consultant can help you navigate this process and ensure the site is viable for development. Note: No bridging lender will lend you money against land unless it has full planning approval in place.

3. Assess Site Conditions

The condition of the land can significantly impact construction costs. Conduct surveys to check for potential issues such as drainage, soil stability, or contamination. This is particularly important if the site was previously used for industrial purposes. Note: Lenders will not lend on a site that has contamination issues.

4. Understand Access and Utilities

Ensure the site has suitable access for construction vehicles and the ability to connect to utilities like water, electricity and gas. If these aren’t readily available, additional costs may arise.

5. Negotiate the Purchase

Once you’ve found a suitable plot, negotiate the purchase price. Keep in mind that land prices can vary widely depending on location, planning permissions and demand. Be brave and don’t be afraid to make your pitch and then walk away. Just because you don’t hear back for a few weeks does not mean you haven’t won the deal.

6. Work with a Professional Team

Collaborating with a solicitor experienced in property transactions is essential for completing due diligence and ensuring a smooth purchase. They will check for any legal restrictions, easements, or potential complications with the title.

Note: The biggest barrier to a smooth and quick property transaction is usually an incompetent solicitor. Make sure you choose the right legal firm, we can advise you here at Breeze.

The Importance of Hiring a Professional Team for Your Project

Building a property to sell or rent is a complex process that requires expertise from multiple professionals. Hiring a skilled team ensures your project runs smoothly, stays on budget and adheres to building regulations. Here are the key professionals you’ll need:

1. Architect: Designing Your Vision

An architect is essential for creating a functional and aesthetically pleasing design that meets your needs and complies with planning regulations. They can also assist with submitting planning applications, coordinating with other professionals and managing the design process throughout construction.

2. Main Contractor: Managing the Build

The main contractor oversees the construction work, including hiring subcontractors, managing timelines and ensuring quality standards. A reputable contractor with experience in similar projects can save time and prevent costly mistakes. Note: if you find a good one stick with him or her because they will be worth their weight in gold

3. Mechanical and Electrical (M&E) Engineer: Ensuring Efficiency

M&E engineers design and implement essential systems such as heating, ventilation, air conditioning and electrical wiring. Their expertise ensures the property is energy-efficient, safe and compliant with regulations.

4. Structural Engineer: Building Safely

If your project involves significant structural elements, a structural engineer will be needed to calculate load-bearing requirements, assess foundation needs and ensure the building’s safety.

5. Quantity Surveyor: Keeping Costs in Check

A quantity surveyor provides accurate cost estimates and manages the financial aspects of your project. They ensure you stay within budget by monitoring costs and advising on potential savings. Here at Breeze, we use the same 2/3 firms in all of our developments as they are speedy, professional and we trust their judgement 100%.

6. Project Manager: Streamlining the Process

While not always essential, a project manager can coordinate all team members, monitor progress and address issues as they arise. Their role is to keep the project on track and minimise delays.

7. Planning Consultant: Navigating Regulations

A planning consultant is invaluable if you’re building on a site with complex planning requirements or if you need to negotiate with local authorities. They help secure necessary approvals and avoid potential obstacles.

Why a Professional Team is Essential for Investment Projects

Building a property to sell or rent is fundamentally different from building a home to live in. Investors rely on professional teams to create high-quality properties that attract buyers or tenants. By surrounding yourself with experts, you minimise risk and maximise the return on your investment.

Choosing the right team is an investment in itself—and one that will pay dividends in the long run.

Funding Your New Build with a Property Development Loan from Breeze Capital

Financing a new build project can be challenging but with the right funding solution, you can turn your vision into reality. At Breeze Capital, we specialise in property development loans designed for investment properties. Here’s what you need to know:

1. Investment Property Loans: What They Are

A property development loan provides the capital you need to build or redevelop a property. Breeze Capital focuses exclusively on funding investment properties, meaning the project must be intended for resale or rent after completion. Neither you nor your family can occupy the property, as it must remain a commercial investment.

2. Flexible Financing Tailored to Your Project

Breeze Capital offers funding solutions based on your project’s needs, including:

• Land Purchase: Funds to acquire the site if you haven’t already secured it. The land must have full planning permission in place.
• Construction Costs: Financing for materials, labour and other expenses.
• Professional Fees: Coverage for architects, engineers, surveyors and other professionals involved in the build.

3. The Advantages of Working with Breeze Capital

• Specialised Expertise: We understand the nuances of property development projects and can offer guidance throughout the process. Our team have been there and done it for over 25 years.
• Tailored Loans: Our funding solutions are structured to match your project’s construction timeline and cashflow requirements.
• Efficient Approval Process: We aim to streamline the application process, so you can focus on your build. This usually means that all drawdowns are actioned and in your bank account literally hours after we receive the QS’s progress/drawdown report.

4. Ensuring Eligibility for Funding

To secure a property development loan, you’ll need to provide:

• A business plan outlining the project’s scope, costs and expected returns. We can provide templates for you to use if this is easier.
• Planning permissions and any necessary documentation for the site.
• Evidence of your experience in property development, if applicable.

5. Post-Construction: Selling or Refinancing

Once the property is built, you can either sell it to generate a profit or refinance through a longer-term commercial mortgage to retain it as a rental investment. This flexibility allows you to maximise the value of your development project.

Why Choose Breeze Capital for Your Property Development Loan?

With a focus on investment properties, Breeze Capital offers the expertise, flexibility and support you need to make your project a success. Whether you’re building a single home or a portfolio of properties, our loans are designed to help you achieve your investment goals.

Understanding the Loan Drawdown Process

When financing a new build project, funds from a property development loan are typically released in stages through a process known as drawdown. This ensures that funds are available when needed while maintaining control over project costs and progress. Here’s an overview of how the loan drawdown process works:

1. What Is a Loan Drawdown?

A loan drawdown is the staged release of funds from your development loan. Instead of receiving the full loan amount upfront, you’ll receive funds in line with the progress of your project. This minimises interest costs, as you only pay interest on the funds you’ve drawn down.

2. Key Stages of the Drawdown Process

1. Initial Release:
   • The first tranche of funds is typically used to purchase the land or site and cover any initial fees such as planning permissions or professional services.
   • This stage often requires an independent valuation of the site to confirm its value.
2. Progress Payments:
   • Subsequent funds are released in line with pre-agreed milestones, such as completing the foundation, walls, roof and internal finishes.
   • A monitoring surveyor, often appointed by the lender, will inspect the site at each stage to confirm progress.
3. Final Release:
   • The final tranche of funds is released upon project completion, ensuring all costs are covered.

3. How to Request a Drawdown

• Submit a drawdown request to your lender, including supporting documentation such as contractor invoices, a project timeline and a progress report from your surveyor.
• The lender will review your request and arrange for an inspection to verify progress before releasing funds.

4. Associated Costs in the Drawdown Process

The drawdown process involves several professional fees, including:

• Monitoring Surveyor Fees: For site inspections and progress reports.
• Solicitor Fees: To handle the legal aspects of each drawdown stage.
• Valuation Fees: For confirming site and project value at various stages.
  These costs should be factored into your overall budget when planning your project.

5. Benefits of the Drawdown Process

• Cost Control: Funds are released as needed, reducing the risk of overspending.
• Project Accountability: Regular inspections ensure the project stays on track and meets quality standards.
• Interest Savings: You only pay interest on the funds drawn, minimising overall financing costs.

What Are the Costs Involved in Building an Investment Property?

Building an investment property involves more than just the cost of materials and labour. A range of professional fees and associated expenses can significantly impact your overall budget. Being aware of these costs ensures you can plan effectively and avoid surprises during the project.

1. Land Purchase Costs

The cost of acquiring the land or site is one of the largest initial expenses. Additional costs may include:

• Stamp Duty Land Tax (SDLT): Applicable based on the purchase price of the land.
• Legal Fees: Solicitors handle the conveyancing process and due diligence.
• Planning Permissions: If not already secured, you’ll need to budget for submitting applications and possibly hiring a planning consultant. Useful link here

2. Professional Team Fees

Hiring experienced professionals is essential for a successful project. Key costs include:

• Architect Fees: Typically charged as a percentage of the project cost, architects design your property and manage the planning process. Useful link here
• Structural Engineer Fees: For designing safe and compliant structural elements.
• M&E Engineer Fees: To plan and implement efficient mechanical and electrical systems.
• Quantity Surveyor Fees: For cost management and budgeting throughout the project.

3. Construction Costs

This is the largest portion of your budget, covering materials, labour and site management. Factors that can influence construction costs include:

• Site preparation and groundwork.
• The choice of materials and finishes.
• Weather conditions and unforeseen delays. Useful link here

4. Loan-Related Costs

If you’re using a property development loan, you’ll need to account for financing-related expenses, including:

• Interest Payments: Typically calculated on drawn funds, not the full loan amount.
• Arrangement Fees: Usually a percentage of the total loan amount.
• Exit Fees: Often charged when the loan is repaid, such as after refinancing or selling the property.
• Valuation Fees: Required at various stages to assess project value.

5. Monitoring and Compliance Costs

To ensure the project stays on track, you may incur the following fees:

• Monitoring Surveyor Fees: For site inspections and progress reports.
• Building Regulations Compliance: Costs for inspections and certifications to meet regulatory standards.
• Insurance Costs: Including site insurance and warranties for structural defects.

6. Marketing and Post-Construction Costs

Once the property is completed, you’ll need to budget for marketing or refinancing expenses:

• Sales Agent Fees: If selling, these can be a percentage of the sale price.
• Letting Agent Fees: If renting, agents typically charge for tenant placement and ongoing management.
• Refinancing Costs: Including legal and valuation fees for securing a long-term mortgage.

Planning Ahead to Maximise ROI

Understanding and accounting for these costs is vital for a profitable investment property project. By working with experienced professionals and lenders like Breeze Capital, you can ensure your project is well-managed and financially viable. Proper budgeting and cost control not only help avoid surprises but also pave the way for a successful investment.

Post-Construction: Selling or Renting Out Your Investment Property

After completing your new build project, the next step is turning your investment into a financial success. Whether you plan to sell or rent the property, having a clear strategy is essential for maximising returns. Here’s what to consider:

1. Selling Your Property: Realising Immediate Profits

If your goal is to generate immediate cash flow, selling the property may be the best option. Key steps include:

• Marketing the Property: Work with experienced sales agents to market your property effectively and attract the right buyers. Professional photography and staging can make a significant impact.
• Setting the Right Price: Conduct market research or hire a valuer to determine a competitive yet profitable asking price.
• Timing the Sale: Monitor local market conditions to sell at a time when demand is high and prices are favourable.

2. Renting Out Your Property: Building Long-Term Income

Renting out your property can provide steady income and long-term capital growth. To do so successfully:

• Target the Right Tenants: Identify your ideal tenant base, such as professionals, families, or students and tailor your marketing to attract them.
• Ensure Compliance: Meet all legal requirements for rental properties, including safety certifications and tenancy agreements.
• Hire a Letting Agent: An experienced letting agent can manage tenant placement, contracts and ongoing property management.

3. Refinancing Options: Unlocking Value for Future Investments

Once your property is complete, refinancing can help you release equity to fund your next project or reduce borrowing costs. Options include:

• Commercial Mortgages: Switch to a long-term mortgage with competitive interest rates.
• Buy-to-Let Mortgages: Ideal if you plan to keep the property as a rental investment.
• Portfolio Refinancing: If you have multiple properties, consolidating them into one loan can simplify management and reduce costs.

4. Strategies to Maximise Returns

• Add Value Post-Build: Consider enhancing the property with landscaping, premium fittings, or sustainable energy solutions to boost its value or appeal.
• Tax Efficiency: Work with an accountant to optimize your tax position, such as claiming allowable expenses and structuring ownership effectively.
• Monitor Market Trends: Keep an eye on property values and rental yields to identify opportunities for selling, refinancing, or reinvesting.

Why Breeze Capital is Your Ideal Partner for Building Investment Properties

At Breeze Capital, we understand the unique challenges and opportunities involved in building investment properties. Our property development loans and expert advice make us the perfect partner for your project. Here’s why you should choose Breeze Capital:

1. Expertise in Investment Property Finance

Unlike traditional lenders, Breeze Capital specialises in funding investment properties, providing a deep understanding of the specific needs of developers and investors. This focus allows us to structure loans that align with your goals and project and cashflow timelines.

2. Tailored Funding Solutions

Our property development loans are designed with flexibility in mind. Whether you need funds for purchasing land, financing the build or covering professional fees, our loans are customised to meet your project’s requirements.

3. A Streamlined Loan Process

Navigating the complexities of property development can be challenging, but we’re here to make financing straightforward:

• Quick Approvals: We aim to provide prompt decisions to help you stay on schedule.
• Clear Terms: Transparent loan terms ensure you understand every aspect of your funding.
• Staged Drawdowns: Funds are released as needed, minimising interest costs and aligning with project progress.

4. Access to Experienced Professionals

Building a high-quality investment property requires collaboration with experts and Breeze Capital can connect you with experienced professionals, including:

• Architects
• Surveyors
• Contractors
• Planning consultants

5. Dedicated Support Throughout the Project

From initial discussions to the final sale or refinancing, we provide ongoing support to ensure your project runs smoothly. Our team is available to address questions, provide guidance and help you overcome challenges along the way. This includes cost or construction overruns.

6. Focus on Investment Success

At Breeze Capital, our goal is to help you achieve a strong return on investment. We focus on providing funding and support that enable you to create properties that appeal to buyers or tenants and generate sustainable income.

Partner With Breeze Capital Today

Whether you’re building a single property or managing a multi-unit development, we offer the expertise, funding and support you need to make your project work.

For more information on how Breeze Capital can help you with your property requirements, please call us on 01244 565095

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