Ground-up Residential Development With Sales Guarantee
Chancery Mews, Thrapston, Northamptonshire
Pivot Provides A Senior Development Facility Alongside An Lds Sales Guarantee, Bringing A Luxury 5 Unit Housing Scheme To Fruition
GROSS LOAn - £1.959m LTGDV - 65% DEAL TYPE - Ground-up Development DEAL DURATION - 18 months
The Opportunity
Pivot’s borrowers were seeking finance for the purchase of land adjacent to the centre of a small country town in rural East Northamptonshire, with planning permission for the creation of a cul-de-sac of detached properties offering three 2-storey homes with garages, parking and landscaping, plus two single-storey dwellings with car parking.
The small development would be bordered by trees and several Grade II listed buildings which are plentiful in the small market town, making it attractive to purchasers seeking to acquire an upmarket home for themselves, rather than a BTL proposition. With a Sales Guarantee from LDS as part of the deal, the local developers were provided with a guaranteed purchase on completion of the scheme, as well as an equity contribution alongside Pivot’s loan.
The developers came with plenty of construction experience having already built several other similar small estates across Northamptonshire.
The site is located behind properties fronting Chancery Lane, a mere quarter mile from Thrapston town centre. Situated immediately to the rear of the site are playing fields occupied by Thrapston Football and Cricket Club.
Thrapston is a charming, small town with many historic buildings and provides a range of local shops and amenities with more comprehensive facilities available in Kettering some 15 minutes away by car. Kettering offers a mainline station with a fast direct route into central London which takes under an hour. Thrapston offers the best of both worlds: scenic rural landscapes and provision of good hospitality and recreation, such as nearby water sports. The A45 and A14 intersect not far from this characterful and burgeoning market town with its picturesque medieval stone bridge, so it is easy to access not just Kettering, but also Peterborough and Cambridge.
The Deal
Offering a choice of 2,3,4 and 5-bedroom detached houses, the dwellings on the 1.14-acre site will be of traditional construction with stone facing to satisfy Planning requirements, and timber floor joists, roof trusses and staircases. Plots 1 and 3 will be chalet style over two floors with the upper rooms being built into the roof space, Plot 2 will be built over two storeys with separate roof space and Plots 4 and 5 are bungalows.
The site is irregular in shape although generally level in contour and had been partially cleared to satisfy Planning requirements. There were a large number of Conditions contained within the Planning Permission for the land, including care for a Listed boundary wall which needed to be included in the development, but the QS considered these were not particularly unusual or onerous for a project of this size and nature, and complying with them should be well within the capabilities of the Borrower.
The marketing period for the individual units is estimated to be in the region of 6-12 months, given the uncertain economic climate and interest rate rises negatively impacting on mortgage rates. With a build period expected to be 12 months, the borrower confirmed his intention to market the properties off-plan once the first unit is wind and water-tight (circa month 4-5 of the loan). As the borrower will then have 13-14 months to sell the properties, the LDS Sales Guarantee provided underlying reassurance and a secondary exit strategy to the developer.
Key Transaction Highlights
· Experienced developer/contractor partnership (the borrowers) who have experience of other similar, successful developments in the surrounding geographical area.
· Adequate unencumbered assets available to secure the finance.
· LDS Sales Guarantee underpinning the development finance exit strategy.
· Appealing location for property buyers wanting a country home in a quiet, rural area, but with nearby fast commuting time to central London and other larger conurbations a short drive away.
Deal Team
Relationship Manager: Tim Akin, Pivot
Credit Manager: Matthew Rogers, Pivot
Legal: Field Fisher
Valuation: Kempton Carr Croft
Project monitoring: Edward Cooper Young Chartered Surveyors
Comment from Tim Akin at Pivot:
“This development was in a delightful location and would appeal to the increasing number of home buyers who are now seeking a country lifestyle and don’t mind the commute to their place of work, or those who can easily work from home. This transaction further strengthens our ties with LDS; we get the benefit of a guaranteed exit, as does the client, who also benefits from a cash contribution up front.”
Comment from the broker (Jason Dempsey, Developer Money Market)
“Pivot offered a great deal, especially with the Sales Guarantee from LDS, and this partnership between them is attracting a lot of attention and interest in these uncertain times in the residential property development market. It’s a perfect backstop when time is tight on a loan, or unexpected delays occur in the build. Pivot and LDS are really experienced in small developments like this one and their expertise and understanding shines forth and is very welcome in moving a deal forward quickly and positively.”
Our Origination Team:
ANDY REID
SALES DIRECTOR
M +44 (0)7831 365 839
D +44 (0)20 3695 5511
VISHAL DIXIT
HEAD OF BUSINESS DEVELOPMENT
M +44 (0)7889 122 330
D +44 (0)20 3695 5511
TIM AKIN
BUSINESS DEVELOPMENT MANAGER
M +44 (0)7785 568 454
D +44 (0)20 3695 5511
View full details of other case studies at: pivotfinance.co.uk/news