Property development finance is a specialised funding solution designed to support the entire lifecycle of property construction, significant refurbishments, conversions, and new builds across the UK. This type of loan helps developers cover essential costs, including land acquisition, construction expenses, and associated professional fees.

Unlike a standard residential mortgage, which secures debt against an existing property, development finance is primarily secured against the estimated future value of the completed project, known as the Gross Development Value (GDV). A key characteristic is that interest is often rolled into the loan, with the total capital and accrued interest typically repaid upon project completion, usually through the sale or refinancing of the developed property.

• Developer Experience: Lenders generally prefer applicants with demonstrable experience and a track record of successful project completions. However, new developers can secure finance, especially by working with an expert broker who can negotiate terms on their behalf.
• Project Viability & Feasibility: This is paramount. Lenders meticulously assess:
  • Gross Development Value (GDV): The projected market value of the completed development is a primary determinant of the potential loan size.
  • Total Development Cost (TDC): A comprehensive breakdown of all project expenses, including land, build costs, professional fees, finance charges, and a contingency (typically 10%), is essential.
  • Loan-to-Cost (LTC) & Loan-to-GDV (LTGDV) Ratios: These ratios define the percentage of costs or value the lender is willing to finance. Lenders commonly offer up to 70% of the land value and 100% of the build costs, or up to 65-70% LTGDV for new builds and refurbishments, respectively.
  • Market Demand: Lenders will assess the market for the completed units to ensure sufficient demand for a successful sale or rental.
• Equity Contribution: Borrowers are typically required to invest a portion of their own capital, often between 10-40% of the project costs.
• Exit Strategy: A clear and viable plan for repaying the loan is fundamental for approval. Common methods include the sale of the completed development or refinancing onto a long-term mortgage. Without a robust exit strategy, a loan may not be approved.
• Planning Permission: While it is possible to secure development finance without planning permission, having it in place significantly eases the process of finding competitive lending and can increase the plot’s valuation by as much as 30%.
• Financial Stability & Creditworthiness: Lenders consider the personal and business financial health of applicants. While credit history is a factor, the viability of the project itself and the experience of the development team are often more critical. Personal guarantees from directors may be required for limited companies.
• Project Timeframe: The proposed timeline for project completion and subsequent sales is also a key consideration.

We don’t just list requirements; we guide you on how to prepare for them, positioning ourselves as a valuable advisor who helps you craft robust business plans and exit strategies that instill lender confidence.