The lender was approached by one its brokers to assist a new customer who had exchanged contracts with a land owner on an option to purchase the freehold interest of a farm in Hertfordshire.
The property was to be redeveloped on a joint venture basis.
The option agreement was divided into a number of phases and UTB’s client required development finance to carry out the first two phases.
This included the redevelopment of an old stable and barns into high-quality residential units.
The land value was being deferred until the project was complete and sold.
The agreement also allowed the client to purchase the adjacent farmhouse from the same vendor.
This required a loan of £1.2m from UTB and it was subsequently let on an assured shorthold tenancy.
UTB was able to cross collateralise the two loans allowing it to lend 100% of the purchase price of the farmhouse and also 100% of the build budget for the first and second phase of the development.
Two months into the development, the client was approached by a potential purchaser who was looking to buy one of the units via an initial cash payment followed by a build contract agreement by which the purchaser funds the build.
This benefited the customer and UTB and it restructured the facilities to allow the client to use the initial sales proceeds to reduce their debt and the build budget, allowing them to use the funds being provided under the build contact.
The development has a gross development value of £6m and is progressing well.
UTB is continuing to fund part of the build and its quantity surveyor is monitoring the progress of the project as a whole.