Island For Sale, Offers Around £6 Million

Plymouth’s historic Drake’s Island fortress on sale for £6m

The entire island’s one massive development opportunity and comes complete with a disused 6th Century barracks, a pier, a network of underground tunnels and planning permission for a luxury hotel and spa. Taking Drake’s Island as an example, we take a look at how a developer with vision could purchase land and turn abandoned buildings into a viable, upmarket business.

Drakes Island, just 600 metres off Plymouth in Devon has just come onto the market with a guide price of £6 million. That includes everything on the six acre site; the existing buildings, land and pier. However, the buildings and tunnels will need a lot of work as the last time they were in use was back in 1989, when they were used as an adventure training facility.

So, if you were interested in buying this tiny island with huge potential, what would be needed to buy and develop it?

Development loans

The chances are that whoever buys Drake’s Island will need at least a little assistance from a loan broker such as Loan.co.uk as they’ll need around £6 million just to buy the island. And, probably further millions on top to develop the buildings and take advantage of the planning permission for the luxury hotel and spa complex.

At Loan.co.uk we’re able to help property developers, investors and landlords with development loans from £50,000 right up to £100 million, so more than enough to cover Drake’s Island and the associated development costs.

So, how do development loans work? Well, let’s take Drake’s Island as an example.

To start with, you’d need to purchase the island, you’d need (approximately) £6 million. Then, there are three basic types of development project to consider; light development/refurbishment, heavy renovation and finally, ground-up development. Because the long abandoned buildings on the island are likely to need heavy refurbishment work/conversion (there’s probably nothing remaining other than stonework), so the project will no-doubt fall into the ‘ground-up’ development category.

Ground-up developments typically require major planning, an architect, a large team of builders and tradespeople. The project will probably last a long time, with the finance drawn-down/released as agreed stages of work are completed.

For the sake of this example, let’s say that that £3 million is needed to develop the existing buildings into a luxury hotel and spa.

A lender would probably be able to finance 50% of the land/ruins and 70% of the build. So, the buyer will need to come up with at least £3 million of their own money to buy the island and a further £900,000 for the build. Making £3.9 million and that’s without a contingency fund or adding in legal and conveyancing fees etc.

Lending on this type of project often relies on the gross development value (GDV)

The GDV is important because many lenders will only consider lending at a maximum of 65% of the GDV, the total value of the finished development. So, if you believed that the island/luxury hotel and spa in our example would be worth £10 million when fully complete, the maximum they would probably be prepared to loan to a potential developer would be £6,5 million.

Of course, this is just a loose example of how a development loan might work, using fairly wild guesses as to the actual amount needed for the purchase and development of a luxury hotel and spa on Drake’s Island. It will be interesting to see who buys it and what their vision for it will be.

Of course, if you have deep pockets but need a little help with financing your development plans for the island, Loan.co.uk will be more than happy to assist you.

Related articles

Building new frame energy-efficient house

Help with solving the UK’s housing crisis with modular homes and developmental loans

Theresa May has said on more than one occasion that “Britain’s housing market is broken and in need of fixing.” Could modular housing boost the housing supply?

Gap between North and South house prices

Gap between North and South house prices to close over the next five years

The BBC has reported that It’s been predicted by Savills, the estate agents, that the long-standing price divide between homes in the North and homes in the South will narrow somewhat over the next five years.

Chancellor holding the Budget Box before revealing help for borrowers and the housing market

Autumn Budget 2018

What’s in it for borrowers, developers and the housing market? No-doubt spurred-on by analysis earlier in 2018 that revealed house-building across about 50% of England was slower..

Man constructing a small model of a modern building

Fastest and slowest house price movements in the UK revealed

A new report from online estate agents, HouseSimple, has identified the fastest and slowest moving property markets in the UK. There’s great news if you’re a first time buyer; the UK housing market as a whole..

experian_logo

Credit reference company helping renters become first time buyers

Rental payments recognised in credit reports for the first time. For the first time ever, tenants will be able to use the fact they pay their rent in full and on time to help build up a better credit score and credit history. That’s because..

Drake's Island for sale

Island For Sale, Offers Around £6 Million

Plymouth’s historic Drake’s Island fortress on sale for £6m. The entire island’s one massive development opportunity and comes complete with a disused 6th Century barracks, a pier..

types of property surveys

Types of building surveys and choosing the right one for you

If you’re looking to purchase a home, make sure you get expert advice on your mortgage. A property survey is vital because once you’ve exchanged contracts it will be down to you and at your cost to put any defects..

Will Brexit affect your mortgage?

Will Brexit affect your mortgage?

A mortgage broker such as Loan.co.uk can help you through the options. On 29 March, 2019 the UK is due to leave the European Union. We take a look at how Brexit could affect mortgages, most people’s biggest..

New home building on the rise

New home building on the rise

A 15% increase in new homes, but the UK still isn’t building enough homes. Back in November 2017, the UK government announced that 217,350 new homes had been built in England during 2016-2017..

Chancellor holding the Budget Box before revealing help for borrowers and the housing market

Types of loan explained

Loans can come in many forms and names, from mortgages to secured to bridging loans, how do you…

Categories

Bridging
Loans

Development
Loans

Credit
Help

In the
News

Shall we get started on building your bespoke loan?

Simple online application Online loan application icon

Share This