Developers – What’s in Bricks and Mortar?

What’s in bricks and mortar? If you’re a developer, what can you do with property? What can you do with property in partnership with a lender who understands property? Property financing opens up a host of options to a developer…

1. Raising capital

If you need cash to buy an additional investment property (e.g. a buy to let) and you have sufficient equity in your existing property portfolio, you can refinance your existing loan(s) to release equity. Although this will probably result in an increased repayment on your existing mortgage, you now have cash to use as a deposit which, using leverage again, can allow you to grow your portfolio further.

2. Buy-to-sell

If your strength is research, you can find a deal at below market value that you can potentially sell on for profit. A lender would ordinarily lend against the purchase price or the open market value with repayment due on the sale of the property. A few buy-to-sells per year while it comes with significant risk attached, does have the potential to produce a healthy capital gain.

3. Add value-to-sell

Research being key once again, if you buy a property and add 15-25% to its value through a refurbishment, you can sell it for profit after the lender is repaid. Buying at the right price is critical here. If the market moves or you’ve bought too high then any potential gain via a sale will be severely limited.

4. Add value-to-keep

As per 3, but this time you could decide to refinance the existing debt and extract the value you have added out of it to put towards the deposit of the next property you wish to refurbish. The refurbished property can then be rented and if repeated, you will develop a property portfolio. It’s important on this point to remember that Seneca Bridging is an unregulated lender. We can’t provide finance on properties in which the borrower (or their family) has lived in or will live in the future.

5. HMO conversions (house in multiple occupation – property which is rented by three or more tenants who aren’t part of the same household/family)

If you can obtain the appropriate permission and licence, a HMO can potentially produce you a higher yield. A lender can assist a developer with the purchase of the property, and even fund the conversion costs of the property into a HMO, and the now multi-let property can result in a significant increase in the long term refinance of the existing lender’s debt in order to extract new equity to put towards the purchase of another property. As per the above, the rental cover will be tested to ensure cover of the new lender’s repayment.

6. Capital growth

Certain properties in some areas perform better than others. If over the longer term a developer has seen their portfolio appreciate in value you can refinance the existing lender’s debt against the capital growth and extract that value to purchase another property. If for example you had three mortgaged properties that have benefited from capital growth over time, you could probably sell one to pay off the mortgages on the other two. That said, this is not an exact science by any stretch and leveraging up increases risk, particularly in times when the market suffers. It is therefore difficult to predict the rate or extent capital growth will occur.

7. Land

Purchasing land with a view to securing planning permission for a development of one or more residential properties can be a route to create value for developers. You can then sell the land with planning to a developer and pick up the uplift on value at that point, or you can approach a lender to fund the development and your uplift should be significantly greater as your profit will be based on the sales from the development after the lender is repaid.

The attraction (or dislike) of any of the options above is entirely dependent on your risk appetite, abilities and time. There are significant risks involved but these are hedged by doing your research, buying cheap, careful management of cash flows and not biting off more than you can chew. So, what is in bricks and mortar? Working with a lender who really understands property and works with developers to achieve the right solution is the first step on the right path!

About Seneca Bridging

Seneca Bridging has a strong team with a concentration of property lending experience and we are able to guide developers directly as well as via brokers on how we can best assist them. We are contactable on 01942 295 982 or by email at

Seneca Bridging offers unregulated short term bridging loan funding for residential and commercial property transactions, auction purchases, renovations and development projects. Seneca Bridging is a principal lender, not a broker or intermediary service. The team lends their own funds so don’t need to consult other lenders or banks.

Seneca Bridging is a provider of unregulated bridging and development finance to borrowers throughout England, Wales and Scotland. Seneca Bridging’s reputation is built on providing quick, flexible and dependable finance.

Blog by: Aziz Shan, Seneca Bridging