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Property
Development
running out
of money

£
£
A development can run out of cash for a number of reasons, especially in a tough market. But that doesn’t mean your site needs to grind to a halt. Chat to us to get part-complete funding to get your site moving again.

Careful costing of a property development is key to ensuring your project stays on time and on budget, but even the most experienced builders, property developers and landlords know that it takes just a few bumps in the road to throw these straight out the window.

That’s why, when arranging development finance its common that a lender will expect you to include an extra sum as contingency. It’s normally a significant figure in the region of 10%, and it is likely you will run through it. According to UK Construction Online less than one in three projects completes within 10% of its original budget.

If your budget ends up falling short, there’s no need to panic. There are usually additional development finance options a specialist can offer. If you need to discuss your funding options or just need some advice from, give us a call on 01489 346788.

The sooner you talk to us, the better your chances of getting the build back on track.

What can make a property development run out of funds?

You get blindsided by unexpected issues

You’ve brought in an experienced quantity surveyor to manage your materials and your project was carefully costed, so what could go wrong?

Even with a New Build, where the cost of constructing the property should be accurate down to the final roof tile you can run into problems before you even get started.

The groundwork can throw all sorts of spanners in the works. Before the work begins a full ground investigation must be carried out to identify any problems that could impact the finished development such as subsidence.

If something crops up, you could be in for months of delays and added costs already.

When it comes to conversions and renovations the chances of you running into issues is even higher.

For starters, you could discover any kind of structural deformity that wasn’t picked up in the survey that will quickly chew through your time and funds. Walls need underpinning, pipes need relaying, asbestos, dry rot, the previous owner papered over dodgy DIY… the list is endless.

You underestimate the costs

Estimating a new build accurately can make the difference between a profit and a loss. A good estimator is worth their weight in gold, so your best bet is to bring in a professional. There will be countless ‘little things’ that you forget to factor in if you have limited experience and those little things add up to push you well over budget.

The cost of materials and supplies can be difficult to predict given the fact their prices can fluctuate drastically between the time you make the estimate to when the project actually kicks off, especially in periods of high volatility.

Get your prices and quantities locked in with your suppliers to ensure they can fulfil your order on time. Your workers not being able to crack on with a new build because they’re waiting on orders will eat away at your profits.

Our free deal optimiser service saves on average £10,475.

By offering a free price comparison tool we place the power back in your hands. Our deal optimiser service forces lenders to compete for your business, saving you time and money. †

Compare & Optimise

What can you do if you go over budget?

Use alternative materials

This is particularly effective if you recognise early that you’re going over budget. You can easily trim down costs when it comes to aesthetics and a few luxuries – swap out the granite worktops for something cheaper and forget about the underfloor heating.

Reduce the project scope

Think about the elements of your build that you can’t live without. Then, cut back on the things that you can.

Secure additional finance

If you’ve decided that you can’t skimp anymore on the plans, talk to a bridging loan broker about securing additional funds. If you’ve already got a charge against the property, your best option may be a second charge bridging loan which will fund the completion of your development to be repaid when you sell or refinance.

If you’re only short by a few thousand, say £20k you could consider using a secured loan or a 0% interest credit card.

Build in phases

If you’re working on transforming your own home and you’ve blown your budget. Relax. Break the project down into more manageable chunks and build in phases.

It may mean you won’t have your extension by Christmas, but the alternative is settling for a rushed job and skimping on what you really wanted.

Get in touch

Not sure what the best option is for you? Speak to one of our property finance consultants who are qualified to give you impartial advice, with no obligation.

We’re passionate about property, and would be happy to help.

Contact us

What to do when your property development runs out of money?

No money, no materials, no pay. Your workers aren’t going to work for free and your site will grind to a halt.

Ideally, you recognise being over budget early enough to trim back on costs and keep yourself going a little while longer while you source an additional source of finance before you down tools.

Arranging that bridging finance can be much quicker than you’d expect if you deal with an expert. We got funds into a clients account in 17 days after her development ground to a halt after running out of cash.

Before you get to this stage though, you should have enough of a handle on your budget and finances to recognise that your site is hurtling towards a shutdown.

If you’re unable to get your project back off the ground, eventually your lender will have to resort to seizing the abandoned development and taking control of the project, in addition to any property you may have put down as security.

Thankfully there’s a route you can go down to pull yourself out of this situation.

Secure additional funding: the trusty and versatile bridging loan

It’s likely that your best option will be to secure a second charge bridging loan to complete the works.

A first charge is the primary funding that you used to purchase the land and start the works. This is the loan that will be repaid first, even if your property is seized by the lenders.

It’s worth noting that the rate for a second charge bridging loan is usually higher to compensate for the higher risk a lender accepts when loaning you the money. But it’s better than losing the development, your security and reputation if the project crumbles without additional funding.

The second charge bridging loan will be in place for between 9-18 months to help you complete the works and you won’t usually have to make any monthly payments as the interest will be a part of the loan that is repaid in full when you exit.

Once you’ve sold or refinanced onto a longer term finance arrangement you will make the repayment in full.

Bridging Loan Reviews

  • I had an outstanding experience

    I had an outstanding experience working with Propp and want to give special thanks to Louis and Megan for their fantastic professional service. From start to finish, they were incredibly knowledgeable, responsive, and supportive throughout the entire process. Their attention to detail and dedication made everything smooth and stress-free. I genuinely felt looked after every step of the way, and their expertise really stood out. I would absolutely recommend Propp’s services to anyone looking for a professional and reliable team. I’m already looking forward to working with them again in the future!

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  • Absolutely brilliant company

    Absolutely brilliant company, managed to get me a bringing loan within 2 weeks, and offer accepted within 48 hours. Extremely friendly and informed staff, nothing was too much hassle!

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  • Fantastic service!

    Caroline and Erin were both incredibly helpful and patient in dealing with my mortgage. They made the process super easy, and completion was a very smooth and swift process. Their fees are also lower than other brokers who I'd spoken to. I'd highly recommend their services!

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  • Bridging Loan & Commercial Finance sorted

    I worked with Brad West and he was nothing short of amazing. He kept me informed and navigated our complex case with ease!! Would definitely use again.

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  • I will use this company...

    over and over again. Very good customer service and quick response.

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  • I am an extremely delighted customer

    Propp is truly a professional and highly supportive company. Jordan and Megan, rendered exceptional top notch brockerage services with uncommon customer service. I am extremely delighted at the services I got and have no reservation in recommending Propp to others for highly efficient professional finance / mortgage brokerage services.

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  • Helpful with good advice

    Matt was extremely helpful, found a good mortgage offer and answered every question I kept sending him very promptly.

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  • Matt and Megan have been fantastic...

    Matt and Megan have been fantastic from the first day I called Propp enquiring for a bridging loan. The communication has been great and it has made what could have been a difficult process very smooth and clear. I would definitely recommend them and it has been a pleasure so far.

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  • Thank you Propp Team!

    Thank you so much to Louis, Jordan and rest of the team from Propp who helped us pursue with our house purchase. We really couldn't of done it without there help & expertise especially as it was not as straight forward as we would have liked. ALL of them went the extra mile and were extremely proactive. Highly recommend to anyone that is self-employed as they really did help to find the best suited mortgage for us!

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  • Very clear options...

    Very clear options presented for a complex overseas mortgage arrangement. Responsive team.

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  • Jordan and her top team

    My partner and I are new to this kind of loan arrangement, but Jordan and her team soon put our minds at rest. After a false start due to our stupidity, Jordan and her team soon turned it around and guided us through quite a complicated arrangement, keeping us informed regularly. If someone was absent or on holiday someone else would take up the reins and help move it forward. We are very happy all round.

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  • PROPP is a fantastic broker with amazing staff.

    They are very knowledgeable, helpful, patient and hardworking. They will keep you informed, give honest advice and always achieve successful outcomes. Great shout to Caroline.

    Read More
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Mortgage Strategy Award 2022
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* bespoke quotes supplied the next working day following provision of all required lender information being supplied and validation by Propp case manager

† saving based on annualised interest rate saving where deal optimiser service negotiated a lower rate than lender’s published rate, based on current average saving of 0.9% and average loan £1051785. Time saving based on automated versus manual bespoke rate requests.

The solutions above refer to unregulated products only. Should you require a regulated loan please contact us. As a mortgage is secured against your property it could be repossessed if you do not keep up the mortgage repayments. Commercial mortgages and some forms of bridging, development and buy to let finance are not regulated by the financial conduct authority.