Cala Finance, the residential funding arm of premium residential and commercial property developer CALA Group, has made its first foray into Rugby by fully funding a £ 1.5 million residential development.

Rugby-based developer Cawston Grange Developments is building eight one and two bed apartments and three two bed split level terrace houses in an exclusive development on the outskirts of the village of Hillmorton, a much sought after residential location close to Rugby.

Cala Finance will provide 100 per cent of the funding for the development in return for a share of the profits.

The company says this type of package is designed to help smaller housebuilders, contractors and first time developers to get funding for their developments which they could otherwise not get from other sources without providing up to 35 per cent of the development costs themselves. Unlike other development funders, Cala Finance also provides advice and guidance on land acquisition, planning, and sales and marketing of the new development.

Known as The Arena, the new development is built on the site of a former detached house.

Construction is well underway and with prices starting from £117,500, the first sale has already been agreed. The scheme is the first residential development undertaken by Cawston

Grange Developments' principal, Doug Stephenson.

An experienced builder who has worked for major housebuilding companies, including Walton Homes, Bellway Homes and Westbury Homes, Mr Stephenson was able to turn his hand to development as a result of the 100 per cent funding he received from Cala Finance.

"To fund this development project, I needed to invest a substantial amount of equity in order to be able to secure a loan from a bank," he said.

"But by working with Cala Finance, I did not need to put in any equity, so I could go ahead with the project. It made it much easier and much less risky to take on this project as a developer."

Ken Phillips, Birmingham-based development director at Cala Finance, said that Mr Stephenson was exactly the sort of experienced builder the company is seeking to back.

"Our finance package is designed specifically for contractors and first time developers and smaller housebuilders, such as Doug," he said. "As all Cala Finance staff have previously worked in the housebuilding industry, in addition to funding all aspects of the development, we also provide assistance on land acquisition, planning and sales and marketing."

Cala Finance is currently funding more than 15 new housing developments across the Midlands.

The firm is investing more than £35 million in property in the region.