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‘Complex’ loan granted for £10m residential Manchester building

Lender Fiduciam has provided a £5 million development loan for the construction of a £10 million seven-storey residential apartment building in Manchester.

The site was refused loans from high street banks and other lenders due to its complicated property title, with freehold interests held by the local council and title restrictions imposed by Homes England.

The restrictions culminated in an agreement specifying both overage payments and an ambitious construction timescale the borrower was obliged to meet.


Fiduciam was able to grant the loan after renegotiating the overage so that it became possible to finance the development.

This marks a significant move as few lenders are willing to provide development loans over land restricted with an overage, as many are poorly drafted and contain complicated terms. 

The £5 million loan was structured to overcome the challenges imposed by the complex property title and overage, and to reduce the likelihood of cashflow squeezes in the course of the development project.

Fiduciam also managed communications with all parties, reaching an agreement for the long-stop date to be delayed, providing a more reasonable timeframe for the development works to be completed.

Henry Fisher of Fiduciam comments: “This was a deal that other lenders were unwilling to lend on because of its complexity, however, we work with small and medium-sized businesses and developers every day and as a result, we get to truly understand their business models and the risks associated with different developments.”

“This means that we can do more than just lend them the money, in fact, we can also help to guide them through the process. As a result, we were able to put together a financing package to meet the needs of the developer and enable the development to progress successfully.”

The buoyant demand for new-build residential apartments in the Manchester area minimised the exit risk for Fiduciam. Healthy sales expectations are also supported by strong pre-sale interest. 

With such strong fundamentals, the lender says it was simply a matter of making the effort to overcome the title complexity.

Rob Moore, finance director at the Northhold Group, adds: “There were complicated elements to this site which had initially proved problematic for the development financing, also owing to the rigidity of the large banks. Then Covid came along, disrupting supply chains, forcing those less well-capitalised suppliers into liquidation and also threatening a severe reduction of financing options.”

“Fiduciam worked closely with us to provide a facility that alleviates cashflow pressures exacerbated by the pandemic. Fiduciam could see this would be a profitable development, so they went out of their way to overcome the complications and to find solutions.”

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    As a lender to small and medium sized developers, I can say that no matter what safeguards are put in place, if they f**k up they f**k up. Why take the risk? Lend your funds elsewhere.


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