Building Trust With Developers

Posted by Mesa Financial on 15th August 2022 -

It’s not uncommon that you turn up to a developer meeting where they haven’t been slightly disgruntled at a previous lender relationship. The scenarios tend to be fairly similar across the board and can on some occasions give the impression that every lender operates in the same fashion. It’s not simply not true but absolutely needs to be taken into consideration. These are the most common issues we come across:

• Delayed drawdowns
• Unwarranted hidden fees
• Change of lending parameters post valuation report

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Delayed Drawdowns 

Labour and materials need to be paid for, so if drawdowns are late, it can cause delays and in worst case scenarios, people down tools and leave site. This is a two-way street with funders so its paramount developers are also providing all required information in order to avoid delays. Some of the common points tend to be; not flagging issues early on, missing or incomplete paperwork and claims that are difficult to substantiate. Communication and transparency are key.

Pick up the phone to your development finance partner and discuss these points on every occasion.

Unwarranted Hidden Fees

This is usually caused by a lack of transparency in term sheets or terms have simply not been explained in detail to borrowers via the advisor on the case. When these hidden fees do crop up, it cements the negative experience borrowers may have faced on previous deals. Our job as advisors is to explain the total cost and unearth hidden fees.

Change of Lending Parameters Post Valuation Report

We recently worked with a borrower who had a direct relationship with a lender that had agreed a certain LTV across a portfolio, subject to the valuation report producing the figures provided. The figures came out as expected and the lender decided to reduce the LTV making the deal completely unviable for the client. This cost the client nearly £15,000 in fees and professional costs. Fortunately, we introduced the correct funding partner into the equation.

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We spend a lot of time building trust with developers and have their best interests at the forefront of everything we do in order to provide the right solutions. With a looming recession, rising interest rates and funders withdrawing from the market. It’s never been a more important time to keep close with borrowers on existing debt facilities and making sure they are partnering with the right development finance providers for future business.