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Why use hotel development finance?

Our bespoke hotel development finance solutions provide cost-effective funding for all types of hotel construction, renovation, and redevelopment projects. Whether this is your first hotel development project or you are looking to extend an existing portfolio, the team at UK Property Finance will help you find an unbeatable deal from a top-rated lender.

Working exclusively with the UK's most reputable development finance specialists, we provide a complete range of hotel development finance solutions under one roof.

Market-leading hotel development finance solutions

UK Property Finance has extensive experience working with established construction companies, development firms, investment funds, and hotel operators. Our products are suitable for large and small hotel development projects of all types, from repurposing existing properties to building new hotels from scratch.

Our goal is to help you present your proposal with the confidence and assurance needed to minimise borrowing costs and maximise your ROI. Whether you are planning ahead or in need of urgent funding for a project already underway, we can help.

Types of Development Finance

When looking for development finance it is important to identify the type of project being planned by the developer in order to access the correct funding product. Types of works can include:

ground up build development finance

Ground up builds

New builds nearly always require development finance loans. Once the project is completed, developers may use development exit finance as a more cost-effective solution, but this cannot be done before the project is watertight.

property conversion or restoration finance

Large scale restoration and property conversions

For this type of project, refurbishment finance is typically the correct type of loan to use, however if the project is larger than the norm, development finance may be a better alternative.

property refurbishment finance

Property refurbishment

A refurbishment loan, which is a type of bridging finance, is generally used for property renovations. It can be used for various improvements including, installing a new roof, general structural changes, building an extension, refurbishment, and decoration.

bridging loan property development

Bridging loan for property development

Property investors or developers may want to buy property which needs development or completion work still doing and are unable to get funding from their bank. This is a typical scenario when a bridging loan is a suitable alternative.

How is Development Finance Repaid?

Development finance loans are typically paid in one of the following three ways:

Paid in full

The total loan amount is paid in full, using the profits, when the project is complete, and the properties have been sold.

refinance with long term loan

Refinancing using a long term loan

This usually happens when the developer wants to keep the development for either personal use or for rental purposes.

development exit finance

Refinancing using a Development Exit Bridging Finance

This type of short term loan is often used to fund a new development project before the current project is sold. It can also be used to give developers a bit of breathing space to complete minor works and find buyers.

Frequently Asked Questions

If you plan on purchasing a hotel in any kind of condition, a long list of factors will be considered when assessing your eligibility.

Have you conducted adequate research on the locality? What kind of competition is there in the area? How well are the existing hotels nearby performing? How realistic are your long-term financial projections? What kind of profit margin are you expecting? What is a realistic timescale for the project's completion?

Importantly, the lender will also want to see that you have planned carefully for all eventualities. Your exit strategy will face particularly heavy scrutiny - i.e. your plan for repaying your development finance loan in full and on time.

Policies and procedures vary significantly from one lender to the next. However, the fundamentals of applying for development finance are fairly similar in all instances, which incorporate the following key stages:

  • Initial Assessment: Your broker will need detailed information on estimated project duration, profit margins, projected final value of the project, total costs and so on.
  • Quote: After which, you will be provided with an initial quotation, outlining the total borrowing costs that will apply if you choose to go ahead with your application.
  • Site Visit: Your lender will most likely hire a trusted third-party surveyor to pay a visit to the project site and conduct a detailed inspection in person.
  • Formal Decision: It is only at this point that a formal decision will be reached regarding your eligibility for development finance, and a final offer made.
  • Legal Work: The solicitor you hire will carefully consider all terms and conditions in the proposed agreement, before advising you whether to sign the contract.
  • Funds Release: Hotel development finance funds are released in a series of stages, in accordance with successful completion of each corresponding project stage.

Documentation requirements also vary from one lender to the next, but you can expect the following as the bare minimum:

  • Proof of identity and proof of address, along with information on all partners, stakeholders, directors and other key parties involved in the project.
  • Proof of income, typically in the form of tax returns and/or bank statements.
  • Formal evidence of company financial performance along with realistic projections for the proposed project.
  • A detailed and extensive business plan, including evidence of adequate research conducted in the locality of the project.
  • Evidence of a workable exit strategy or any viable method by which the loan will be repaid within the agreed timeframe.
  • Full evidence of any required planning permission or other permits, ideally applied for and obtained in advance.
  • For more information or any of the above or to get your hotel development finance application underway, contact a member of the team at UK Property Finance anytime.

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