The Grass is Greener in Heald Green  

We have a client who’s based further up north, around Manchester.  Cleverly he managed to purchase a fire damaged house with a generous portion of land.  The property is in close proximity to Manchester Airport and the station of Heald Green; perhaps, in my opinion, a little too close to the airport.  Not the place to buy to want to live in, but perhaps for rental it would be the opposite.  
 
He then applied for planning for demolition of the existing property and to rebuild four new build houses; thereby doubling the value from his purchase price, simply with a piece of paper.  The current valuation of the land with planning permission is £800,000.  I wouldn’t have imagined prices around Manchester would go as high as this.  
 
The property completed would likely be valued at £2M, or £500K per property.  Focusing in and around London you tend to get blinkered vision, not perhaps appreciating the deals available further out in the country; as the tendency is for the market to be over heated, as demonstrated by the auctions.  Properties in London often go for over what they are worth. 
 
What’s interesting in this case, is the client has given us the properties for refinance, as currently he’s on a bridge, and you don’t want to stay on a bridge for too long, as it may collapse, taking you down with it.  So, the idea is to move on to a more favourable type of finance which will allow him to complete the development of these four properties with a view of selling them out on the open market, or to again refinance on a long term buy to let funding and keep.  Given my superficial analysis above, I think they would make better rental properties than owner occupier ones.  However, it is best to take the opinion of some local agents to get a steer on the best course of action.  
 
We managed to find a funder who would lend 65% of the end value of £2M, which gives him £1.3M.  This is more than sufficient to complete the works, and even leave him a little flush with cash.  This lender, unlike most lenders, does not require you to wait for six months, the refinance can be done within this period.  As a developer, it’s very important to be able to keep recycling your cash, to ensure it does not stay stuck in a property for too long.  
 
The interesting point with this lender is they will lend on the open market valuation within the six month period of purchase.  This means where a property requires work, they will lend based on the end value of the property.  This allows one to purchase potentially with no money down, like the good old days!