Finance is often cited by SME housebuilders as one of the main barriers to building more homes. PHPD caught up with Jason Tebb, Chief Operating Officer, Go Develop, to find out more details about the company’s 100% full development funding offer.
Development Finance is a well-established mechanism to finance a new-build development. How does the Go Develop approach differ?
We’ve looked at all that’s right with traditional development finance, and all that’s wrong with it and created an innovative approach that no one else in the industry is offering; 100% full development funding that covers everything from land and build to stamp duty and project costs.
Through our joint venture partnerships, developers and housebuilders can approach us with a project and need not put in a penny to develop it. In fact, good developers often have more opportunities than they have funds, so it’s fantastic that Go Develop can support them especially with the government drive to get Britain building.
We create a ‘SPV’ to hold the project and once it’s developed and sold we split the profits in the developer’s favour. One of our partners has called it ‘an industry game changer’ and we think that’s a fair summary. We don’t wrap our developers up in complex terms and conditions, we keep it simple and are known to be easy to do business with. It’s something we’re very proud of and our returning partners are testament to.
We have no external shareholders, so we’re not constrained by policy changes, it’s fuss-free and we’re transparent in our dealings.
What are the particular benefits of this approach?
In these uncertain economic times, it is essential for housebuilders to build their projects on firm financial foundations. With Go Develop’s funding, they are choosing a partner with a shared commitment and a shared goal while using 100% of our own funds.
We understand that housebuilders’ profits are often embedded in the work in progress, so with full 100% funding there is no cash flow strain or interest servicing pain. A housebuilder does not have to find multiple, complex loans or provide huge deposits to cover the cost of their project. Instead we offer the ultimate ‘one stop shop’ where all costs are paid by us with no outlay from the housebuilder.
Our partners say that we cut through the finance red tape, delays and constraints developers so often experience. We issue binding terms within 48 hours, and development funds are released as required often within 24 hours. We pride ourselves on delivering fast, fuss-free funding nationwide to make projects happen.
Is this opportunity open to all housebuilders/developers?
Yes, 100% funding is available for any professional housebuilder as long as the project meets the criteria listed below. The first step is to send us your development appraisal and cash flow for the project, along with the full planning notice. We will review and advise within 24 hours as to whether we can progress further.
Are there any specific criteria which your partners must meet?
We like to keep things easy for our partners so the criteria is kept simple. The project should involve a multi-unit residential new build or conversion with full planning permission in place. We ask that the project has an estimated 24-month duration or less, and a GDV between £2m and £15m. There also needs to be a margin of 25% on GDV pre-finance and we prefer developers or housebuilders with some experience of the industry.
What type of development is most-suited to the company’s model?
We focus on new build opportunities, apartments and value family housing, where the housing demand is at its strongest. This enhances the project’s appeal to the widest market and allows for a swift exit and maximum return for both parties.
Right now, we’re finding that the UK property market is changing. The North/South divide is closing, with mainstream markets across the Midlands outperforming some in the South East. Go Develop focus on funding outside of the M25 and we’ve always seen the Midlands as one of our key strategic areas.
Some examples of recent projects we have funded include; seven charming new build homes in Stow-on-the-Wold, Cotswolds, 33 apartments in Kelham Island, Sheffield, 21 new homes and four apartments in Birmingham, 24 family homes in Audlem, Cheshire and 49 apartments in Bedford. Our website has a selection of projects and we actively invite potential partners to speak to our clients and take a reference out on us. Take a look at www.go-develop.co.uk
How many developments has Go Develop been involved with to date?
Since launching just over two years ago, Go Develop are now building over 1,100 units across 29 sites in England and Wales. We have a forward pipeline of £40million and while some funders are cutting back, we’re currently increasing available funding for the right projects.
Go Develop isn’t a bank or a corporation – so what is the source of the funding?
We are a privately owned and privately funded business, backed with substantial capital from our Chairman’s family office and a close long-term strategic partner. We have no shareholders or external board members, and this unique structure, free of red tape enables us to make quick decisions in a flexible way.
As a J/V partner in a development, are there any other aspects that Go Develop can bring to the arrangement?
Go Develop are far more than a funder, we’re experts in property with legal, surveying, marketing and accounting support for our partners. You’ll find a whole team of dedicated and experienced professionals to remove the strain and drain of administration, VAT returns, valuations, chasing solicitors and surveyors allowing the housebuilder to claim back their Sunday evenings and weekends.
Many of our recent partners have taken advantage of the full marketing suite we offer which includes branding, brochures, and website design as well as hoardings, CGIs and drone footage. All allow future buyers to visualise exactly how fantastic the site will be once completed and ensure that our partners benefit from a rewarding result.
