Specialist UK property lender Octopus Property has launched a development-light product targeting small and medium-sized enterprises (SMEs) and smaller developers requiring finance for residential schemes that sit outside the traditional refurbishment or development lending parameters.
'We continue to leverage our market knowledge and relationships to better understand the challenges facing property professionals in accessing development finance, and believe that this product is ideally positioned to fill a gap in the market,' said Gavin Eustace (pictured), head of development at Octopus.
The new intermediate development product, for projects with build costs between £0.5 mln (€570,000) and £1.5 mln, is available at a fixed rate of 8% per annum. Conditions include a maximum loan-to-cost ratio of 85%, and a maximum loan-to-gross-development-value of 70%.
'With wider macro uncertainty affecting the sector, smaller developers are increasingly looking at ways to reposition existing properties to realise value or embark on smaller ground-up schemes which require a new type of funding to match the risk profile of the project,' added Eustace.
Octopus said it was targeting schemes that may require more technical support than a typical refurbishment, but are shorter term, require less monitoring and are lower down the risk curve than a normal development project.
To date Octopus has provided nine loans, totaling £10 mln, for a diverse range of schemes, including the conversion of an office in Leytonstone, North London, into 10 apartments where Octopus agreed a £1.4 mln land loan and a £0.6 mln construction facility.