12-Unit New Build Residential Scheme, Elephant & Castle

The Challenge

Our client, an experienced developer, had secured planning permission for a 12-unit new build apartment scheme on a former light industrial site off Newington Causeway in Elephant & Castle. The site sat within the Elephant & Castle Opportunity Area, where strong demand from young professionals and proximity to the Lendlease Elephant Park development supported premium pricing. However, the scheme included Section 106 obligations for three affordable housing units, and the developer needed a lender comfortable with the affordable element, the phased construction programme, and the relatively tight margins typical of Zone 1 Southwark developments where build costs are elevated.

Our Solution

We arranged a £3.2 million senior development finance facility at 65% loan-to-cost with a specialist lender experienced in Southwark's planning environment. The facility was structured with phased drawdowns monitored by an independent quantity surveyor, with interest rolled up to preserve cash flow during the 14-month build programme. We also negotiated a 4-month extension option at a modest additional fee to provide a buffer against construction delays, which proved valuable when supply chain issues caused a 6-week slippage on the mechanical and electrical package. The lender's familiarity with Southwark Council's affordable housing requirements meant they were comfortable with the Section 106 terms from the outset.

The Outcome

The scheme completed 20 months from drawdown, with the 6-week construction delay offset by a favourable sales market. The nine private units achieved an average price of £595,000 — 8% above the original appraisal — driven by the continuing Elephant & Castle regeneration momentum. The three affordable units were transferred to a registered provider at agreed values. The developer achieved a net profit of £680,000, representing a 22% return on equity after all finance costs.