Development Finance

1. What information do I need to apply for development finance?

We will work together to build up a proposal to submit to lenders. This will include as much as the below details as possible but we can usually guide you on any that are missing.

Purchase price of the land or property
Total development / build costs
Internal square foot of the build & the cost to build per square foot
Expected end value – Gross Development Value (GDV)
Planning status and planning permission details
Development timetable- Cost and build schedule
Details of your experience as a developer
Your available funds and proposed contribution to the project

2. What costs are involved with development finance?

Development finance involves more than just the cost of borrowing. When preparing your development appraisal, it is important to budget for all of the costs associated with bringing the project forward. These can include:

Planning costs – application fees, planning consultants, and any Section 106 or CIL contributions

Professional fees may include architects, quantity surveyors, structural engineers, planning consultants and other specialist reports required for the project.

Valuation cost is normally paid for by the borrower. Depending on the lender and the structure of the facility, this may be done inhouse as aprt of a site visit or allocated to a third party. there may also be arrangement fees, legal costs, monitoring fees and other finance-related charges that are usually rolled up within the finance itself.

Professional fees -architects, quantity surveyors, structural engineers, and monitoring surveyors throughout the build, these can usually be included in te finance as long as the overall cost fits the maximum loan to GDV allowed by the lender.

Legal fees – both your solicitor’s costs and the lender’s legal costs, which are usually payable by the borrower

Arrangement and exit fees – most development finance lenders charge a fee to arrange the facility which tends to be around the 2% of the facility and some also charge an exit fee, usually of 1%. Again this is all dependant on the lender we approach.

Broker fees– Most brokers charge a percentage of the deal which can be up to 2% of the deal itself. I charge a flat rate fee of £1,495 which is due on the offer from the lender. All fees will be discussed upfront with you and we’ll talk you through the full cost picture for your specific deal before you commit to anything, so there are no surprises later in the process.

3. What types of property development can development finance fund?

Development finance can potentially be used for many different types of projects. Examples include:

New-build houses- what we call ground-up developments
Property conversions
Commercial-to-residential conversions
Refurbishment and redevelopment projects
Mixed-use developments
Small and larger residential schemes

The availability and structure of finance will depend on the individual project, including the planning position, proposed works, costs, value and developer experience.

4. How much can I borrow with development finance?

As a general guide, development finance can potentially fund up to 100% of the building costs, while funding towards the land or property purchase may be available at around 50% of the purchase price. The overall facility will also generally be subject to a maximum percentage of the completed project’s value, often around 70% of the end Gross Development Value (GDV).

These figures are not guaranteed and every application is assessed individually. The amount available can depend on factors including the purchase price, build costs, GDV, planning position, developer experience and the overall viability of the scheme.

Because these limits interact with each other, the maximum you can borrow is deal-specific a site with a high land cost relative to build costs won’t necessarily unlock 100% funding. We’ll model your numbers against actual lender criteria rather than a generic rule of thumb.

5. What is GDV in property development?

GDV stands for Gross Development Value. It is the estimated market value of the development once the project has been completed.

For example, if you are developing five houses and each completed property is expected to be worth £300,000, the estimated GDV would be £1.5 million.

GDV is one of the most important figures in a development finance application because lenders use it, alongside the total development costs, to assess the level of risk and the amount they may be prepared to lend.

An accurate and realistic GDV is therefore essential when preparing your development appraisal.

6. What is a development appraisal?

A development appraisal is a financial breakdown of a proposed development. It allows you, your broker and potential lenders to understand whether a project is financially viable.

A typical appraisal will include the land purchase price, construction costs, professional fees, finance costs, other development expenses and the expected GDV.

It can also show the developer’s projected profit and key lending metrics such as Loan-to-Cost (LTC) and Loan-to-GDV (LTGDV).

A well-prepared appraisal can make it much easier for a lender to understand the project and assess the funding requirement.

7. Can I get development finance to buy land without planning permission?

Yes. It is possible to obtain finance to purchase land without planning permission, although the amount of funding available is typically lower than it would be for land with an established planning consent.

For example, funding may be available at up to around 55% of the land purchase price, depending on the lender and the circumstances of the site.

If you are looking to acquire a site before planning is secured, it is worth discussing the project with a development finance specialist early in the process.

8. What's the difference between development finance and a bridging loan?

Bridging finance is generally aimed at buying or refinancing a property and is based on current value. It consists of one drawdown at the start and refurbishment costs are usually funded by the owner of the property. The exit is usually sale or remortgage onto a term mortgage.

Development finance, on the other hand, is specifically structured to fund a build or conversion project, with money released in stages as work progresses and the lender monitoring the build throughout. This works out more cost-efficient as you pay interest only for money drawn down. If your project involves ground-up construction, a conversion, or a heavy refurbishment, development finance is usually the more appropriate route. Development finance is usually paid out in arrears of work done

9. Do I need development experience to qualify?

Not always – but it affects your options. Experienced developers with a track record of completed schemes generally get access to more competitive rates and higher leverage. First-time developers can still secure funding, often by bringing in an experienced project manager or contractor, taking a slightly more conservative loan-to-value, or partnering with someone who has delivered similar schemes before. It’s worth discussing your experience level with us early on, as it shapes which lenders are realistically going to consider your application.

10. Do I need to provide my own money towards a development?

This depends on the lender, the project and the amount of funding required. Although development finance can potentially fund a significant proportion of the project, lenders will assess the overall loan-to-cost and loan-to-value position. You may therefore need to contribute some of your own capital towards the land purchase, costs or development. In some circumstances, additional security or other forms of funding may be considered where there is a shortfall in the required contribution.

11. How long does it take to arrange development finance?

Timelines vary by lender and how complete your information is, but as a general guide, expect several weeks from application to funds being available – longer for more complex schemes or larger loan sizes. Having your planning permission, cost breakdown, and professional team confirmed before you apply is the single biggest factor in speeding things up.

12. How does the money get released during the build?

Development finance is drawn down in stages rather than as one lump sum. Typically, an initial tranche covers the land purchase, and further funds are released at agreed build stages, confirmed by the lender’s monitoring surveyor as work progresses. There is usually a cost per drawdown ( some people also call it a tranche) This protects both you and the lender – you’re not paying interest on funds you haven’t drawn yet, and the lender can confirm the build is on track before releasing the next stage.

13. Can I repay development finance early?

Development finance is generally repaid when the development is completed, often through the sale of the finished properties or by refinancing onto longer-term finance. Early repayment may be possible, but the terms depend on the specific facility. You will usually save on interest if the facility is paid off early and you will normally only be charged interest on the funds you used although no refunds will be given for any costs already incurred or charged up to that point.

14. What happens when the development is completed?

Once the development is completed, the development finance will normally need to be repaid through salesor by refinancing the development onto another type of finance. This might be development exit if our facility has exceeded its timescales. The most appropriate exit strategy will depend on the project and your objectives and we will di

15. What happens if my project runs over budget or behind schedule?

Most development finance facilities include a contingency allowance built into the funding line specifically for this- depending on the lender this can be between 5% – 15%. It is in the best interests of the lender that your project is successful so they will work with you to make that happen and guide you along to make sure that all your projections are realistic. Remember that hey have ample experience with hundreds of projects and developers so we lean on their expertise.

16. Why should I use a development finance broker?

A specialist broker can assess your project, help prepare the financial information required, identify suitable lenders and structure the funding around the needs of the development. With over 100 lenders on the market, all with a different set of criteria it is important to know the lenders well and this is where our expertise is valuable. We will help you choose the right lender for you to make your project as success. We charge a small administration fee for our services it is

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