Property development in Leeds

Despite the obvious challenges of 2020, Leeds maintained a steady stream of new property development schemes last year, with 12 new starts, the same number as 2019. Office space was the standout sector with a record amount of floorspace delivered, whilst the residential sector remained steady. The pipeline for the coming year looks healthy, and with continued investment in the city’s infrastructure, there’s opportunity for developers who manage to secure the right property development finance, and the best sites for potential schemes.

A forward-thinking city

Of all the exciting developments going up in and around Leeds, Citu’s Climate Innovation District arguably has the most buzz surrounding it. In-line with the city’s commitment to becoming carbon neutral by 2030, the development of four-bedroom townhouses and one or two-bedroom apartments, aims to redefine city centre living, as the UK’s biggest sustainable urban community.

Each home is run on 100% renewable energy, using a state-of-the-art mechanical ventilation heat recovery system, and incorporates timber frames and solar panels to help conserve and supply energy. Outside, two acres of tree-filled green space come complete with water jetties and river views. And it’s not only the eco-credentials that make this a ground-breaking development for the city, they’re also the first family homes to be built in Leeds city centre for over 90 years.

The £161 million Leeds Integrated Station Master plan is well underway, with the new Platform Zero in passenger use from early summer, allowing more trains and better connectivity for the city. There will also be direct connectivity to the new high speed rail network HS2 and the Northern Powerhouse Rail (NPR) programme, as well as the potential for 300,000 sq. ft of new commercial developments around the station, making it a world-class transportation gateway.

Continued investment in Leeds and its infrastructure can only mean greater interest and confidence in the city, translating to plenty of opportunity for the property development industry.

 

Types of Leeds property development

Office space was undoubtedly the standout sector for the city in 2020. According to the Deloitte Crane Survey, Leeds saw the second highest quantum of floor space delivered since its survey began in 2006, at 667,059 sq. ft. A large chunk of this (10%) was accounted for by the transformation of the iconic Majestic, located on the doorstep of Leeds Train Station.

It’s also notably the home of the new Channel 4 HQ, so a high-profile win for both the development and the city, and is predicted to be a catalyst for further growth as well as a huge draw for the UK’s young, creative talent.

It’s worth noting that the vast majority of new office space delivered in Leeds in 2020 was funded by property development finance secured well before the pandemic began in March. The pipeline looks far more modest going forward, with 382,000 sq. ft of office space in the pipeline for 2021 and 2022 combined.

With uncertainty over how the workplace will look in a post-pandemic world, developers are also adapting their marketing strategies to promote the wellbeing and community benefits of office developments. Leeds’ One Globe Square and Globe Point are great examples of this, offering over and above the traditional office setup, with yoga classes, shared co-working spaces and business lounges.

Residential development remained steady, with construction beginning for four new developments in 2020, compared with three and four new starts in 2018 and 2019 respectively. Interestingly, all four sites are new-builds, and all are located on sites where construction had previously halted after planning permission was granted, suggesting confidence is on the up for the residential sector in Leeds. This is also backed by the fact that all four developments are Build to Rent (BTR), proving lender confidence that the rental market will continue to prove buoyant post Covid-19.

 

Opportunity for developers in Leeds

It’s a great time to be a property developer in Leeds, and in fact the majority of the UK, 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. 9 times out of 10 it makes sense to take out a loan because using someone else’s cash always proves cheaper that using your own.

Access to more funds also means you can take on bigger projects that might normally be out of reach, and run multiple projects simultaneously or without waiting to sell, increasing your portfolio and ultimately your bottom line.

 

How to finance property development in Leeds

The development finance market can be a minefield. It’s difficult to see beyond the big banks, and easy to miss opportunity if you don’t know where to look. Brickflow does the hard work for you by searching the market in real-time, providing instant online access to development finance.

We provide loans from lenders we know and trust, empowering you to borrow smarter, mobilise quicker and get ahead of the game. It’s the developers who can secure quality finance quickly, who will ultimately win in the war for the most competitive development opportunities in Leeds, and beyond.

Get ahead of the game

Join thousands of property developers already doing more with their development finance

40 +
Trusted Lenders
2000 +
Property Developers
20 +
Average hours saved per application
£ 509 k
Average reduction in deposit*

 

*across our last 10 transactions where the borrower already had an offer

FAQs

Your Questions Answered

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.

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