Our Top Tip to stay ahead of rising property development costs with our Alternative Overdraft Facility

Property development can provide investors with impressive returns, but successfully planning, constructing, marketing and selling a scheme rarely comes without its complications.  

One complication that will be at the forefront of many developers minds right now will be the rising cost of raw materials. 

Over the last three months, inflation on the price of materials has increased by an average of between 10% and 15%, according to the Construction Leadership Council (CLC), and some materials have reportedly risen in cost by as much as 50%. 

This trend doesn’t look like changing any time soon. The cost of steel, cement, glass and other energy-intensive products are all expected to rise because of the energy crisis, according to the CLC.  So, what steps can property developers take to tackle these price rises? 

Here’s an Alternative Top Tip 

One top tip that property developers could take to help manage their rising costs is to buy the materials they need for a development as quickly as possible in order to secure lower prices, ahead of any potential increases. This step alone could make a significant impact on the bottom line of a property development. 

At Alternative Bridging Corporation, our experience shows that it can take up to three months on a development from drawing down the first finance to starting construction and this could mean a significant increase in prices. 

So, in order to raise the money needed to buy raw materials at the outset and access capital at the start of a project, why not use our Alternative Overdraft facility? 

The Alternative Overdraft provides a flexible loan facility that can be drawn upon whenever required, offering borrowers the opportunity to draw, repay or reduce funds when they are needed. It negates the need for expensive setting-up charges each time a loan is needed and can be secured by a first or second charge on a residential or commercial property. 

This approach means developers can secure the Alternative overdraft on existing assets, allowing them to rapidly drawdown to pay for raw materials when they start a scheme, paying back the balance on the Alternative Overdraft as construction progresses and further payments on the development finance are released. And this can developers to keep ahead of price increases and manage the project within budget. 

Click here to find out more about our Alternative Overdraft Facility.