8-Unit Residential New Build, Enfield Town

The developer identified a 0.3-acre brownfield site approximately 400 metres from Enfield Town station that was occupied by two dilapidated light industrial units. The site had been on the market for several months with limited interest, partly due to the complexities of demolishing the existing structures and the presence of some ground contamination from the former industrial use. The developer had completed three smaller refurbishment projects previously but had never undertaken a ground-up new-build scheme of this scale.

Securing development finance was a significant challenge because most mainstream lenders wanted to see a track record of delivering similar projects. The developer also needed to manage the contamination remediation, which added both cost and uncertainty to the project. Planning permission had been granted for eight two-bedroom apartments across two blocks, with associated parking and landscaping, but several planning conditions needed to be discharged before construction could commence, including a contamination remediation strategy and the approval of external materials.

The combination of an inexperienced developer, contamination risk, and the need to fund through a pre-construction phase meant that several lenders initially declined the application. The developer needed a broker who could identify a lender comfortable with these specific challenges and present the case in the strongest possible light.

We approached a specialist development lender who had experience funding first-time developers on new-build schemes in North London. The lender was comfortable with the developer's track record of smaller projects and took confidence from the appointment of an established local contractor with a strong track record of delivering similar schemes in the Enfield area. The contractor provided a fixed-price design-and-build contract, which gave the lender additional certainty over the total construction costs.

The finance was structured as a senior development facility of 1.8 million pounds, representing 68 percent of the total project costs of 2.65 million pounds. The initial drawdown funded the site acquisition and demolition works, with subsequent tranches released against the build programme as verified by the monitoring surveyor. The rate was agreed at 0.78 percent per month with a 1.5 percent arrangement fee, and the facility included a 14-month term with a 2-month extension option if required.

To address the contamination concern, the lender agreed to a slightly higher contingency allowance within the facility and required the developer to obtain a contamination insurance policy. The developer engaged a specialist environmental consultant to prepare and implement the remediation strategy, which was completed within the first two months of the project. All planning conditions were discharged within six weeks of acquiring the site, allowing construction to commence without delay.

The project was completed in 12 months, two months ahead of the 14-month loan term. The contamination remediation was completed without issue, and the build costs came in approximately 4 percent under budget, partly due to the contractor's efficient management of the programme and partly due to favourable material pricing during the early construction phase.

All eight apartments were sold off-plan during the construction period, with the final unit exchanging contracts three weeks after practical completion. The total sales revenue was 2.94 million pounds, marginally above the projected GDV of 2.9 million pounds. After repaying the development finance facility and all associated costs, the developer realised a net profit of approximately 340,000 pounds, representing a return on equity of 38 percent.

The successful completion of this project established the developer's track record for new-build schemes, enabling them to secure development finance for a subsequent 14-unit scheme in Edmonton at significantly improved terms, including a higher LTC of 72 percent and a lower rate of 0.72 percent per month. The developer is now an established name in the Enfield market and has completed three further projects since this initial scheme.