Property Development Finance – Consider a Brownfield Site
A brownfield site is a piece of land that has been previously used for another purpose – often industrial – and is now derelict. Current government policy is to encourage development on brownfield sites.
So the main advantage of choosing a brownfield site for your project is that you are more likely to attract property development finance. The downside of course is the possibility of contamination, especially if it is a former industrial site.
So if you would like to explore this possibility, how do you go about it?
Find a suitable plot. If you are a newcomer, consider looking at smaller sites, such as disused petrol stations. The major developers are often only interested in the larger sites where they can build 30 units or more. A smaller site where you can put up, say, five new homes might be an ideal starting point for you. There will be less competition for acquiring the site and it may well attract specialist property development finance.
Of course, the next step is planning permission. It may be that a condition of planning permission being granted will be a soil investigation survey. This would in all likelihood be insisted on by a lender in any case, so it would be an advantage to have it done at this stage. You would also need to contact the Environment Agency to determine flood risk. Subject to these checks, it is often easier to obtain planning permission for this kind of site as it attracts less local opposition than greenfield sites.
Once you have an option on the land and planning permission, you can apply for your property development finance. There are specialist lenders who may well be prepared to offer you favourable terms, especially in view of government backing for brownfield projects. The lender may well insist on further tests and reports to make absolutely certain of the viability of your project. However, on a site such as a former petrol station, your chances are very good.
Obtaining property development finance is often the biggest sticking point for the newcomer to this business sector. A brownfield project could be the ideal starting point to help you get off the ground.
Please note that the FSA do not regulate commercial loans or commercial mortgages