Build to Rent Development Finance

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Shawbrook’s Build to Rent Development Finance provides customised funding solutions for the construction of rental properties.

Why Shawbrook?

For Build to Rent Development projects, you need a lender who understands your needs. Shawbrook offers expert support from planning to completion. Our team will evaluate your site and, if it meets our criteria, provide backing throughout your project. Shawbrook is here to support your vision.

Any property or asset used as security may be at risk if you do not repay any debt secured on it. Our development finance is not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.

Build to Rent Development Finance Highlights

Loans size £1m - £30m
Maximum gearing 65% Loan to Gross Development Value (LTGDV)
Maximum 85% loan to cost
Cash/equity contribution to be injected ahead of any Bank funding
Development Lender of the Year - NACFB Awards 2021, 2022 & 2024

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What is Build to Rent Development Finance?

Build to Rent Development Finance is a specialised funding option designed to support the construction of rental properties. Unlike traditional property finance, it focuses exclusively on developments intended for leasing rather than immediate sale.

This financing model helps developers cover costs related to land acquisition, construction, and initial operations until the rental income starts flowing. It is aimed at investors and developers who seek a steady income stream from rental properties, providing an alternative to the buy-to-sell market.

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Who is Build to Build to Rent Development Finance for?

Build to Rent Finance is ideal for property developers looking to construct residential buildings for rental income. It suits those aiming to expand their rental portfolios, including seasoned investors, private landlords, and build-to-rent specialists seeking stable, long-term returns.

This financing option supports projects designed to meet the growing demand for rental housing, offering flexibility and tailored terms to accommodate the unique needs of rental property development.

Lending criteria for Build to Rent Development Finance

Shawbrook evaluates applicants on key criteria: developer experience, project viability and profitability, financial health, and creditworthiness. We also consider the location and market demand for the rental properties. A strong business plan, detailed financial projections, proof of sufficient equity investment, and a solid exit strategy are essential for consideration.

Types of Build to Rent Development Finance funding

Explore financing options to secure capital for your Build to Rent project and achieve your development vision.

New Build: Financing for constructing new residential, commercial, or mixed-use properties from scratch, covering land purchase, planning, and building costs.
Conversions and Refurbishments: Funds for converting existing buildings into rental units or updating older properties to meet rental standards.
Residential, Commercial, and Mixed-Use Developments: Finance options for residential rentals, commercial properties for lease, or combined projects with both residential and commercial spaces.
High-Value Residential Projects: Specialised funding for luxury residential developments requiring significant investment and promising high rental returns.
Student Housing, Senior Living, and Co-Living: Funding for niche rental markets like university student housing, senior living facilities, and shared living spaces for young professionals.
Care Homes: Financing for developing care facilities for elderly or disabled residents needing specialised support and care.
Phased Development Schemes: Funding for large projects completed in stages, allowing income from initial phases to support later construction stages.

Costs and Fees Associated with Build to Rent Development Finance

Developers might face several costs and fees including:

Loan Arrangement Fees: Charges incurred for setting up the loan, usually a percentage of the loan amount. Charged upon completion of project.
Legal Fees: Costs for legal services to ensure all documentation and compliance requirements are met.
Valuation Fees: Fees for professional valuation of the property to determine its worth and loan suitability.
Interest Rates: Ongoing costs based on the borrowed amount, which can significantly impact the project's profitability.
Management and Maintenance Costs: Regular expenses for the upkeep and administration of the property.
Insurance: Mandatory coverage to protect the property and investment against risks.
Property Taxes: Government levies based on the property's value, payable annually.

Benefits of Build to Rent Development Finance

Build to Rent Development Finance offers flexible funding tailored to rental projects, enhancing project viability. It ensures stable, long-term income with less market volatility compared to sales.

Developers can benefit from streamlined processes and potentially lower interest rates due to the focus on rental yields. Additionally, it supports creating high-quality, sustainable rental communities, meeting growing demand for rental housing.

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How does Build to Rent Finance, differ from Build to Let Finance?

Build to Rent Finance focuses on funding large-scale rental communities, often managed by professional operators, ensuring long-term rental income. Build to Let Finance, on the other hand, is geared towards individual rental properties typically owned and managed by private landlords, with a focus on short-term rental income. The scale, management, and income stability are the key differences between the two.

Can developers refinance after construction?

Yes, developers can refinance after construction to benefit from improved loan terms or release equity. This refinancing can help reduce interest rates, extend repayment periods, or provide additional funding for new projects.

What is the typical loan term?

At Shawbrook Build to Rent loan terms range from 12-36 months, depending on the project’s complexity and scope. The loan term will include an appropriate period of time for sale or refinance of the completed development. The size and type of development can affect the agreed terms regarding repayments, with larger or more complex projects potentially requiring more flexible repayment schedules.

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