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A Lending Partner That Finances From Construction To Refinancing Can Make All The Difference


In a fluctuating property market, strategies change. A property developer who intended to build a residential block and sell the completed asset could decide that holding some of the apartments is a better long-term option. Similarly, priorities might change; opting for a more sustainable construction method might suddenly prove to be both financially preferable and more appealing in today’s market.

For a property developer to be both agile and open-minded, it needs the confidence that its financial backing can be just as agile. Choosing a bank that provides a one-stop-shop solution, providing development finance all the way through to refinancing once an asset is income-producing, could take away a lot of hassle.

“The benefit to the borrower of our lending model is that clients can work with us long term,” Aldermore Commercial Director for Commercial Real Estate John Carter said. “We can adapt as their plan adapts. We build relationships with customers and believe in what they’re trying to do.”

The Full Spectrum

Aldermore has considerable experience providing both development finance and refinance loans. For example, the bank recently provided a £4.2M commercial residential refinance loan to returning customer McIver Homes, an independent housebuilder and built-to-rent developer, to refinance three sites outside Newcastle-Upon-Tyne. Before that, Aldermore had provided McIver Homes with a £6.4M development loan to finance the redevelopment of a former timber yard.

The firm has a commercial and residential investment offering that could be tailored to the borrower’s strategy and allows a borrower to refinance an existing facility. It could be a solution for a lender looking to refinance a large apartment block or a number of properties spread across an area, including houses of multiple occupancy and student accommodation. 

The bank’s view of the market is therefore wide, covering both development and commercial real estate. It has a good understanding of how property developers and owners are adapting to the many factors currently at play — Brexit, the coronavirus pandemic, climate change and general societal movement in how we use properties.

“Definitely we’ve seen more clients choose to hold assets over the last eight or nine months,” Carter said. “During the stamp duty holiday there was a big push for sales but now that’s ended. People’s plans increasingly have to change as constructing property takes several years, during which time both the market and the company can evolve.”

Aldermore Bank builds long-term relationships with clients in the commercial sector as much as in the residential sector. After funding development, many customers choose to refinance and hold an asset once they have secured a pre-let, for example.

“The developer has done all the work to put the deal together to sign a tenant to pre-let space; the last thing they want to do is to find a new provider for a refinance loan,” Carter said. “If they stay with the same bank, they can transfer the debt from development to a new facility now the asset is set to be income-producing. The fact that we can fund it all means we can provide the right loans to help a borrower’s strategy play out.”


Financing The Green Agenda

Increasingly, clients’ strategies include the green agenda. The need to construct more sustainable, low energy properties is extremely real. Legislation will enforce key changes over the next decade, such as the need for all nonresidential property to have an EPC rating of A and B by 2030, and developers have to start moving in the right direction, Carter said.

“Improving sustainability isn’t an easy task for anyone and it can’t fall on one party,” he said. “We can’t get away from real estate’s contribution to the UK’s carbon emissions and we can affect what we do with new buildings to make them more efficient. But everyone in the chain needs to contribute.”

Aldermore is actively looking to work with more developers focused on sustainability, particularly in the area of modern methods of construction (MMC). For example, the bank recently provided Yorkshire-based sustainable developer Citu with an £8.4M development finance loan to fund a new scheme in Sheffield.

“Sustainable developments that meet the needs of the present without compromising the ability of future generations to meet their own needs are challenging in a sector which, by its nature, is a big user of natural resources,” Carter said. “Yet many MMC techniques can bridge the gap between sustainability and construction practices. We want to build more relationships with developers who are championing the growing trend for MMC.”

Climate change is certainly one of the largest factors affecting real estate decisions that might play out over the next few decades. For a property developer looking to take the hassle out of finance so they can focus on tackling this challenge and more, working with a one-stop-shop lender such as Aldermore could provide the smooth relationship they’re looking for.

This article was produced in collaboration between Aldermore Bank and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to

Related Topics: refinance, Development Finance