A tricky £1.5m development finance facility was completed with a regular client of Castlehill Capital. This 10 residential unit scheme was their first ground up development – and it was this perceived lack of experience which posed the first hurdle.
At Castlehill Capital we work with all types of developers from 1st timers to experienced national house builders. In this particular case, the lack of experience was mitigated by phasing the site so that the initial 5 units were completed and sold before continuing with phase 2.
The next problem to arise was that one of the pre commencement planning requirements hadn’t been satisfied despite work on the site having already commenced. A ground contamination inspection had been undertaken but was unable to fully investigate the site due to an existing structure on the land.
The site was a former petrol station and some of the building still remained onsite and was used as a workshop by the developer to store equipment and provide facilities for the contractors.
We opened up dialogue with the council and were satisfied that the risk of contamination under the structure was minimal. Maintaining and using the building instead of demolishing it was the preferred option for the developer as it saved costs and provided an area to store and cut the timber frames.
After this issue was resolved, the funds were drawn down quickly and the developer was able to refinance the existing 1st charge (which was on a much higher interest rate) and provide cashflow for the work to continue onsite.
We look forward to the first phase being completed at the end of the first quarter.