The Benefits of Phasing
Here we explain the benefits of a phased scheme on a developers pocket, but also how it can allow developers that are short on development experience to scale up much quicker
Why phasing a development can help developers scale up sooner
When we say a development is phased, it means that the build stages and the sales are separated. Normally, phasing
is reserved for larger schemes, but it has 2x main benefits to developers; it helps preserve equity, and it also stops
market saturation when it comes to selling or renting the end units. But it can also help those with less development
experience scale up to bigger developments sooner
In addition, breaking the project into smaller chunks may make it easier to fund. We recently had an example of a borrower that had built 3x previous schemes; 3x units, 4x units and then 8x units. They are now [purchasing a site that has planning for 42 units.
On paper there are probably very few (if any) lenders that would fund them on 42 units in one go; 8x units to 42x units is too big a jump. However, when you break it down into a 20x unit phase and a 22 unit phase, every lender will see that as a natural progression.
Phasing, therefore, not only preserves equity, allowing you to scale quicker, it also helps overcome question marks lenders may have about your development experience
The next time a bigger site comes up, don’t dismiss it and think I’ll do that in 5 years, take a look at it in more detail today