Property Development Finance

Property development finance is a short-term loan that pays for building new homes or commercial space. Unlike a mortgage or a standard business loan, it is sized on the finished scheme, the Gross Development Value (GDV), rather than the site as it stands or your personal income.

It sits at the bottom of your capital stack as senior debt with a first charge over the site. How much of the rest you fund in cash, and how much comes from mezzanine finance or an equity partner, is the main structuring decision on any scheme.

As specialist development finance brokers, we work with over 100 property finance lenders across the UK, from high-street and challenger banks to specialist development lenders, and negotiate rate, leverage and terms on your behalf.

You don't receive the facility as a lump sum. A land advance funds the purchase, then the lender releases build costs in stages, typically monthly, after its monitoring surveyor confirms the work on site.

Interest is normally rolled up and repaid at the end, and you only pay it on money you have drawn. Repayment comes from unit sales or a refinance onto development exit finance or term debt, so lenders test your exit as hard as your build.

• 6 to 10 drawdown stages over a 12 to 24 month build is typical
• Each release follows a monitoring surveyor's site inspection
• Interest rolls up on the drawn balance, not the full facility
• The loan is cleared from sales or a refinance at practical completion

The different types of development finance follow what you are building. Ground-up residential property, commercial property, mixed-use schemes and conversions each draw a different set of lenders, and lending appetite, leverage and pricing change with them. A scheme of eight houses with detailed consent is a different credit decision from a speculative industrial unit or a Class MA office conversion.

Pick your project type for terms, lending criteria and a worked example specific to it.

Lenders underwrite the scheme first and you second. Experienced developers get the best rates and leverage, but first-time developers can still be funded with the right contractor, professional team and a realistic appraisal.

• Planning: at least outline consent for most lenders; detailed consent gets better terms
• Track record: completed schemes of similar size and type
• Professional team: architect, quantity surveyor, main contractor and solicitor
• Appraisal: build costs from a QS, sales values backed by local comparables
• Exit: evidence that units will sell or refinance at the values assumed
• Valuation: a RICS valuation of the site and the completed scheme

To apply, send us the scheme through the Deal Room or call. We review new enquiries within 24 hours, tell you plainly whether the scheme is fundable, and come back with indicative terms from the lenders most likely to say yes.

Once you choose an offer, we manage the application through valuation, legal work and credit approval. Most property development loans reach first drawdown 4 to 8 weeks after you apply, and a well-prepared pack is the biggest factor in how fast that happens.

• Site address, purchase price and planning reference
• Plans, unit schedule and specification
• Build cost plan, ideally from a quantity surveyor
• Sales values or rents, with local comparables
• Your track record and the contractor you intend to use
• How much equity you are putting in, and where it comes from

Interest rates start from 6.5% p.a. (see our current development finance rates table by product), but the headline rate is only part of what a development project costs to finance. Fees are agreed up front, and a good broker will show you the all-in cost of each offer, not just the rate. Model your own scheme with the development finance calculator below, or read how monitoring surveyor fees work.