The first question a finance provider will ask with regards to development finance is ‘are you building from the ground up or converting an existing property?’
Ground up developments are deemed the riskier option and generally only supported by finance providers who have experience in this area. Many bridging type lenders won’t support ground up developments only light/heavy refurbishments.
In some instances, developers decide to demolish the existing property and re-build from scratch to best accommodate the need. As the security (existing property) will be demolished, the finance provider will use the land value (post demolition) as part of the development appraisal.
New build flats
Senior & Mezzanine