If you’re a UK property developer, you’ll know that getting access to finance quickly isn’t just about buying houses, refurbishing them or acquiring land. It can also be about covering large and often unexpected VAT costs.
When you’re buying commercial property, a new build or land for development, you might need to pay 20% VAT upfront. This can leave you tens or hundreds of thousands of pounds out of pocket. This explains why VAT bridging loans for developers UK are so popular.
Why Do Developers Get Such Large VAT Bills?
When a developer is buying a certain kind of property such as a commercial asset or a new build, they need to pay VAT when the deal is completed. Even though most developers are VAT-registered and can get the money back from HMRC later, it can take weeks or even months for the money to reach their accounts.
Unfortunately, the VAT needs to be paid immediately. If a developer doesn’t have the cash, the deal can fall through and the property can end up in a rival’s hands. In many cases, it’s just not possible to tie up so much capital in bridging the gap without help.
What Exactly is a VAT Bridging Loan?
A VAT bridging loan for developers UK is a short-term loan that can help cover the VAT part of a property purchase. You’ll normally repay the loan when HMRC give you the refund, but you can also cover the cost with a resale of development finance. Take a look at our loans for builders and developers
The loans normally last for up to six months and can be unsecured or secured against the property you’re buying or another asset. You can generally expect to receive the capital within a few days, which means you don’t have to miss out on a great property deal due to VAT obligations. It also means you don’t have to destroy your cash flow in the process of buying the property. You can also get bridging loans for HMO.
Main Benefits of VAT Bridge Loans for Developers
A VAT bridging loan will help you preserve your cash flow, secure a deal faster and remove much of the stress of waiting for HMRC to refund you. It can also keep you competitive as it means you can act now whilst others are struggling to gather the funds to purchase a property you’re interested in.
Get the Property You’re Targeting with Bridge Loan Direct
At Bridge Loan Direct, we have years of experience in arranging straightforward property development finance for professionals. We understand the unique pressures that property investors face and can give you access to quick, flexible bridging loans that keep your cash flow healthy. We’ll work closely alongside you to ensure you get the funds that you need, when you need them.
