Glossary definition
Development Finance
Specialist lending designed to fund ground-up construction or major refurbishment projects, structured with staged drawdowns released against verified build milestones. Development finance is typically provided as senior debt secured by a first legal charge over the site, with facilities sized as a percentage of GDV (loan to gross development value).
Definition
Specialist lending designed to fund ground-up construction or major refurbishment projects, structured with staged drawdowns released against verified build milestones. Development finance is typically provided as senior debt secured by a first legal charge over the site, with facilities sized as a percentage of GDV (loan to gross development value). Terms usually run for 12 to 24 months and interest is commonly rolled up into the facility.
See also
Closely related terms.
Senior Debt
The primary layer of debt in a development finance structure, secured by a first legal charge on the property and sitting at the bottom of the capital stack with first priority on repayment.
Drawdown
The staged release of loan funds during a development project, triggered by the completion of pre-agreed construction milestones.
LTGDV (Loan to Gross Development Value)
A key lending metric in development finance that expresses the total loan amount as a percentage of the gross development value of the completed scheme.
Monitoring Surveyor
An independent surveyor appointed by the lender to inspect the development site at regular intervals and verify that construction work has been completed to the required standard before each drawdown is released.
Gross Development Value
The total market value of a development upon completion, encompassing all units and any commercial elements.
Further reading
Guides that touch this term.
Guide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readReadGuide
RICS Red Book Valuations for Development: What Lenders Require
A comprehensive guide to RICS Red Book valuations in development finance, covering what lenders require, how valuations are structured, and how to ensure your scheme is accurately assessed.
11 min read readRead
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