Development Finance Cardiff
Find out how much you can borrow against your Cardiff property development project now.
The Cardiff property market
It’s no secret that the housing market in Wales is booming. Annual house price growth accelerated to 13.4% in Q2 of 2021; higher than any major city in England, with Northern Ireland just marginally taking the top spot for the highest growth in the UK.
The popularity of Wales as a desirable location for second homes was bolstered further by the pandemic. This, combined with the well-publicised housing shortage across the country, means there’s opportunity for savvy property developers with the right access to property development finance, to make their mark in Wales’ capital city and its sought-after surrounding areas.
Addressing the housing shortage
In 2014 Cardiff city council's now controversial Local Development Plan (LDP), stated the city needed 41,000 new homes by 2026. Thousands of homes were given planning permission on countryside surrounding the city, with the ambition to increase its size by around a third.
The expected shortage was partly due to predictions that the population of Cardiff was due to rapidly increase. Following a review by the Welsh Government, this forecast has now significantly reduced, largely due to the pandemic and Brexit, and the city is now expected to grow by less than a quarter of the previous forecast. The LDP is therefore also under review, and it’s likely that the number of new homes required will be far lower than the 41,000 stated originally.
The outcome of the new LDP is something property developers should watch closely. It’s a pivotal time for the city and will shape how the landscape looks until 2036, providing strong insight into where the best property development opportunities could lay in Cardiff going forward.
Key property developments in Cardiff
Development is currently mainly concentrated to the north of the city, although the diggers are also moving into the east, with both areas dominated by new-build residential neighbourhoods and estates. The average selling price for residential property in Cardiff currently sits at £267K.
Here are some of the key sites in the development pipeline, which vary in their progression from planning stage to nearing completion.
Northwest Cardiff
Plasdŵr
A new £2bn 'garden city' located between the suburbs of Radyr and St Fagans in the northwest and west of the capital. Predicted to take up to 20 years to complete, the sizeable new suburb will comprise 7,000 homes and five new schools over 900 acres. There are currently four developers building the foundations of Plasdŵr, creating three of its five neighbourhoods, and there is of course opportunity for many more as the project progresses.
Maes-y-Deri
A 211-property site from Barrat Homes, due for completion in June 2022. The houses comprise two, three and four bed coach houses, terraced and semi-detached properties.
Northeast Cardiff
Churchlands
A semi-rural location between the suburbs of Pontprennau and Lisvane, earmarked for 4,500 new homes. Two developers are currently linked with the site; Redrow, which has 560 homes across two developments, with completion expected by 2027, and Taylor Wimpey which has submitted a planning application for a new community space with up to 2,500 new properties.
East Cardiff
St Edeyrn's Village
A large section of land sandwiched between Pontprennau and Old St Mellons has been redeveloped by Persimmon and Charles Church, and is now nearing completion. The developers have added 1,300 new homes to the village of St Edeyrn’s, and proposals include an interchange to join Rhymney Line rail services.
Persimmon Homes are building up to 1,020 new homes at the site, over six phases. Construction had already started on five, with all six due for completion by 2026.
Llandaff
The BBC moved its Wales HQ to Cardiff city centre in 2020, leaving a large opening for development on its old site at Llantrisant Road in Llandaff. Taylor Wimpey has been granted planning permission to build, comprising 364 houses and flats, from one-bedroom apartments to detached five-bedroom homes.
Opportunity for developers in Cardiff
The lure of the South Wales coastline has never been stronger for homeowners or developers, says Laurence Hooper, Managing Director of Laurence Francis Property Development:
“Property in Cardiff and across the Vale of Glamorgan is booming and there’s no sign of this changing for the foreseeable future. Having all the convenience of the city and a flourishing economy within a few minutes of the coast and national parks mean buyers are continuing to flock to the area for the best of both worlds. As a result, opportunities are rife for developers with local knowledge to tap into a flourishing market, driven by increasingly wealthy home seekers.”
We agree it’s a great time to be a property developer in one of the UK’s most exciting and popular cities, if you have access to the right development finance, which is one of the top barriers to success for SME developers.
Property development finance is a short-term loan used to fund construction or refurbishment projects. It nearly always makes sense to borrow, because using someone else’s cash almost always proves cheaper that using your own.
Access to more funds also means you can take on bigger schemes that might otherwise be out of reach, as well as running several projects at the same time, increasing your portfolio and profit more quickly.
How to finance a development in Cardiff
The development finance market can be difficult to navigate. It’s overwhelming, and challenging to see beyond the big banks, so it’s also easy to miss an opportunity if you don’t know where to look.
Brickflow is the UK’s first comparison site for development finance. We bring the market online, searching in real-time, providing instant online access to development loans. We only work with lenders we know and trust, and we even help you to create the perfect lender presentation. With a few clicks, you can invite lenders to make their best offer, meaning you’re empowered to select the finance that’s right for your project.
It’s the developers who can secure quality finance quickly, who will ultimately win in the race for the most competitive development opportunities in Cardiff, and beyond.
To talk to us about development finance for a project in Cardiff, or elsewhere in the UK, give us a call on 020 3488 1674, or email info@brickflow.com.
HOW DOES BRICKFLOW CALCULATE DEVELOPMENT FINANCE?
Development finance is the most complicated of all property loans to calculate. There are a lot of variables to consider, and these loans are underwritten more subjectively than a regular mortgage.
We use the same loan modelling process across all lenders, to allow easy comparison between lenders. Each lender will have their own model, which will constantly be tweaked, so the loan figures provided on the Brickflow results screen may differ to the final quotes provided by the lenders. However, we constantly monitor our estimates against the actual quotes received to ensure any differences are minimal.
The main criteria to how a development loan is calculated are:
- Loan to Gross Development Value (LTGDV)
- Loan to Cost (LTC)
- Minimum client equity contribution
- Day 1 land loan cap
The lender determines the loan amount from a combination of the above factors and delivers a final combined amount. Other factors that can affect leverage and pricing are; micro geography, asset type, lender loan book exposure, development experience, build type and more.
HOW DOES THE BRICKFLOW LOAN APPLICATION PROCESS WORK?
Once you have shortlisted your lenders and want to make an application you will be asked to complete further details on the project; your development experience, a development appraisal and property schedule. This will automatically be sent to the lender shortlist (up to 5x lenders), where these lenders are encouraged to submit their best loan terms.
These lenders will conduct a preliminary underwrite and offer their final loan terms, decline to offer or ask more questions. Once all the loan terms are received, borrowers can ask any questions to the lender or Brickflow. When you have selected your preferred option, that lender will move to their credit approval process.
Once the loan is credit approved, the lender will instruct their professionals; valuer, IMS and lawyers.
There is a fee of £ 995 payable to complete the full application, but this is refunded when the loan completes or in the event that the chosen lender then declines the application.
HOW DO YOU RANK THE LOANS?
Loans are ranked in order, from largest to smallest. When the loan amounts are the same, the Brickflow software ranks them in price order, with the cheapest loan first.
HOW LONG DOES IT TAKE TO GET A LOAN?
Once you’ve selected your 5 lenders and your project goes live on Brickflow, bids can be received within as little as 2 hours. It normally takes up to 48 hours for all 5 bids to come in, and sometimes a little longer if it’s a complex case or there is incomplete information.
The info the lenders need is clearly detailed in the online Project Appraisal but primarily includes; your development experience, development appraisal and a property schedule.
Once you have selected your preferred bid, there is a fee of £ 995 payable to complete the full application. (This is refunded when the loan completes or in the event that the chosen lender then declines the application.)
From paying the application fee to full credit approval, it normally takes 2-3 days, although the quickest credit approval on the platform so far is 4.5 hours
Credit approval to loan completion is mainly dependent on your professional team. If your lawyer works quickly and collaboratively with the lender's professional team, you can complete 3-4 weeks later.
The industry standard to complete a development loan is close to 6 months. With good borrower co-operation, Brickflow can do it in 4 weeks from start to finish, but 8 weeks is more typical.
CAN INTRODUCERS USE BRICKFLOW?
Absolutely. We work with estate agents, brokers, IFAs, architects, lawyers, and any other property professionals. Click here for our website for partners.
HOW DOES BRICKFLOW GET PAID?
Brickflow receives a commission from the lenders, but only on completion of the loan. We are therefore strategically aligned with our borrowers to ensure their loan completes successfully.
Any commissions are built into the results you see on screen and will be included in the loan bids you receive in the Deal Forum and in the credit-approved loan offers. There is no separate payment due.