Development Finance

Development finance is a specialist short-term loan designed specifically to fund construction, conversion, or major refurbishment projects. The key difference from a bridging loan is the way funds are released: a bridging loan provides the full amount on day one, while development finance is drawn in stages as the build progresses.

This staged drawdown approach means you only pay interest on capital that has been drawn, which can significantly reduce the overall cost compared to receiving the full amount upfront. Development finance also involves a monitoring surveyor who inspects the site before each drawdown, providing an additional layer of project oversight.

Development finance is generally more suitable for projects involving substantial construction works, while bridging loans are better suited to light refurbishments, chain-break purchases, or situations where funds are needed in a single lump sum.

We can provide indicative terms within 48 hours of receiving your project details. From formal application to first drawdown typically takes 2 to 4 weeks, depending on the complexity of the project, the status of planning permission, and how quickly the valuation and legal work can be completed.

The speed of the process depends in part on how well-prepared your application is. Having your development appraisal, planning documents, build cost schedule, and contractor details ready when you apply will help us move quickly. We also recommend instructing your solicitor early so that legal work can run in parallel with our underwriting.

We can fund up to 90% of build costs and up to 70% of the land or site purchase price. The total facility is also subject to an overall loan-to-GDV (Gross Development Value) cap of approximately 70%, which ensures there is sufficient margin between the loan and the projected end value of the completed development.

The exact ratios available to you will depend on the strength of the project, your experience as a developer, the quality of the planning consent, and the location and type of property being developed. Developers with a proven track record and well-structured projects may be able to achieve the highest advance rates.

For most development projects, having full planning permission in place is a prerequisite for funding. Lenders need to understand exactly what is being built, any conditions attached to the consent, and any potential risks before committing funds. A resolution to grant planning (where the committee has approved but the formal decision notice has not yet been issued) is also generally acceptable.

Some lenders will consider sites with outline planning permission, but the terms will typically be more conservative. For permitted development schemes (such as office-to-residential conversions under Class O), a Prior Approval certificate is usually required. If you are unsure about the planning status of your project, we are happy to discuss it before you formally apply.

Experience is valued but not always essential. We prefer to work with developers who have a track record of completing similar projects, as this reduces the risk for both parties. However, we also support first-time developers who can demonstrate relevant skills, for example, a background in construction, architecture, project management, or property investment.

If you are new to development, starting with a smaller, less complex project such as a single-unit conversion is a good way to build your track record. You can also strengthen your application by partnering with an experienced project manager or main contractor, which gives the lender confidence that the build will be managed competently.

Staged drawdowns are a core feature of development finance. Rather than receiving the full loan on day one, funds are released at agreed milestones as the build progresses. A typical drawdown schedule might include releases at foundations complete, wall plate level, first fix, second fix, and practical completion, though the exact stages are agreed upfront based on your build programme.

Before each drawdown, an independent monitoring surveyor visits the site to inspect the works and confirm they have been completed to the required standard and in line with the agreed specifications. Once the surveyor signs off, the lender releases the next tranche of funds. This process ensures that the build is progressing as planned and protects both you and the lender.

You only pay interest on capital that has been drawn, which means the cost of the facility increases gradually as the build progresses rather than the full interest accruing from day one.

The three most common exit strategies for development finance are sale of the completed units, refinance onto longer-term mortgages, or a phased disposal approach for larger schemes. We assess each exit on its merits and require evidence to support the viability of your plan.

If you are planning to sell, we will want to see comparable sales evidence supporting your projected prices. If you are refinancing, an agreement in principle from the refinance lender strengthens your application significantly. For phased disposals, we structure the facility to allow partial repayments as individual units are sold, reducing the outstanding balance progressively.

The typical fees for development finance include an arrangement fee (usually 1% to 2% of the total facility), monitoring surveyor fees (charged per site visit, typically £500 to £1,500 depending on the project size), a valuation fee for the site and GDV assessment, and legal fees for both your solicitor and the lender's solicitor.

We are transparent about all costs from the outset and provide a full breakdown when we issue terms. It is important to include all fees in your development appraisal so that you have an accurate picture of the total cost of the project. If you would like an estimate for your specific project, please get in touch and we will provide a detailed cost breakdown.

Yes, you can use your own main contractor or manage the build yourself if you have the appropriate experience. However, the lender will want to see that the contractor has relevant qualifications, adequate insurance (including professional indemnity and public liability), and experience of delivering projects of a similar scale and type.

For larger projects, a JCT or similar formal build contract between you and the contractor provides additional protection and is sometimes required by the lender. If you are managing the build yourself, you will need to demonstrate that you have the skills and availability to oversee the project effectively.

We fund a wide range of development types including ground-up residential new builds, commercial-to-residential conversions (including permitted development), barn and heritage building conversions, heavy refurbishments involving structural works, mixed-use schemes combining residential and commercial elements, and HMO conversions.

The key requirements are that the project has appropriate planning consent, a realistic build cost and programme, and a viable exit strategy. If your project type is not listed here or you are unsure whether it would qualify, please get in touch. We assess every project individually and are often able to accommodate non-standard schemes.