We arrange property development finance from £26k to £250m, funding both experienced and first time developers for asset acquisition, ground up development, mixed-use schemes, heavy renovations through to change of use, conversions and lighter refurbishment projects.
We can achieve up to 100% LTGDV (loan to gross development value) with additional security and 100% of build costs. When you need to finance property development contact us first for a no obligation quote.
Our finance specialists help package up your proposal so they achieve the best rates available from our panel of 100+ lenders, family offices & private investors.
When you require property development finance arrange a call with our experts - we're ready to help.
|Loan to gross development value (LTGDV)||65% maximum (100% with additional security)
And 100% Build financing
|Loan term||3 to 24 months|
|Loan amount||£26,000 up to £250m|
|Interest options||Rolled-up, retained or serviced|
|Interest rates||From 0.44%|
|Decision||Immediate decision in principle|
|Completion||In under 3 weeks|
|Early repayment fees||None|
|Availability||Secured on assets in UK & Europe
Individuals, Companies, SPVs
No credit & adverse credit considered
|Exit strategy||Sale or refinance|
Property development examples
✔ Residential development finance
✔ Ground up residential development loans
✔ Heavy refurbishment development loans
✔ Permitted development loans
✔ Commercial development finance
✔ Student accommodation development finance
✔ HMO development finance
✔ Pre-planning finance
✔ New build finance
✔ Self-build development loans
✔ Property conversion loans
✔ Property refurbishment loans
✔ Marketing period loans
✔ Sales period loans
Financing Property Development
Designed to be used when a normal bridging loan is too short term or cannot offer the capital needed to progress a project, it is a specialist product designed around the timescales and financial requirements specific to the construction sector.
By utilising development finance, you'll potentially be able to undertake multiple projects simultaneously, or avoid having to wait until an existing project is sold, or is fully sold, before commencing your next development.
At the end of the building or refurbishment project, the property finance facility is normally repaid through sale of the properties or through a re-finance agreement.
The interest rates on development loans will depend on the size of the project which is being funded, the value of the security on offer, the value of the property once building work is completed and the amount of money being borrowed.
Experienced property developers with more established track records will generally benefit from the most competitive interest rates for development funding due to the perceived reduction of risk. However, we're happy to work with first time property developers and will make a lending decision based on the strength of the proposed project plan.
Find the best rates on your development finance
We offer experience-based, impartial information and accessing quotes from the whole of market. Because we have incredible relationships with many specialist UK's lenders we're also able to move fast and can give you an in principle decision within 24 hours.
Get expert assistance today.
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What is development finance?
Development finance is a type of loan facility that borrowers use to fund developments and works significantly different to other types of financing such as bridging finance. A developer typically borrows money from a lender in order to purchase property investment opportunities such as buying land (with planning permission or without planning permission) to build upon or acquiring an existing building with a view to renovate, refurb or change its use.
Due to their high returns, the opportunities in the UK are quite often focused on creating new residential dwellings. Whilst this may be the primary use of the finance, there are many other uses such as: to fund regeneration initiatives, build new commercial properties or mixed-use projects.
Whether its converting a historic building, changing the use of a high street landmark department store, renovating a local pub, creating a new leisure and hospitality complex or developing a holiday park, property development finance is used for all sorts of property ventures.
Who takes out property development finance?
Borrowers are typically, but not always, property developers who have been working in the sector for a number of years and have expertise in knowing what property investment opportunities deliver the best yields. These developers are also able to understand the property finance market place and how they can access different types of finance from a variety of lenders.
Why use property development finance?
New properties, refurbishments and regeneration initiatives all require a substantial amount of money before you can realise any return on your investment.
Developers need significant capital up front in order to buy property investment opportunities such as land, existing buildings or businesses that they want to convert into new property developments. In addition, developers intending to create a tenanted property must have large amounts of cash available for initial construction costs which incur during what is known as pre-let. The pre-let period covers the time from when construction starts until it's ready to receive its first tenant.
When would it require a specialist lender?
Quite simply every development loan is as unique as the developer's specific circumstances at that moment in time and their project. Combine this with each lender's preference for funding certain types of developments and not others, their specific lending criteria and current appetite for risk, these all factor into their decision-making process.
Securing development loans can be a complex and nuanced process as the solution is not one-size-fits all. This is where broker who deal with specialist lenders come into their own as they're often able to quickly arrange finance for each project at the best rates.
Who can use this finance facility?
Anyone looking to fund property development projects from ground up to refurbishment projects will likely need property development loans.
Developers often work with banks or traditional lenders such as building societies, but they also are increasingly needing to access specialist lenders for either more flexible terms and conditions - particularly if you don't meet current lending criteria due to a lower credit score, lack of track record or where their project is not straight forward.
A great example is the current high demand for financing brownfield sites or new requirements such as air space developments, many main stream lenders will steer clear of these projects as they are considered too high risk.
What finance facilities are available?
There are a number of finance options that developers can consider.
The options available for developers varies according to the type of venture whether it's residential or commercial property, as well as what stage of projects has been reached.
In addition different lenders have their own preference so before going anywhere else it’s important to speak to a broker who understands the property finance market place and know where to go in order to get the most appropriate property development finance for your specific needs.
Light development finance
This is often the development loan of choice for property renovation projects where you are retaining most if not all the property’s current tenants. This property finance option is typically more commonly used on small renovations projects so can be accessed quickly without too much difficulty.
Heavy refurbishment finance
This is designed for borrowers whose renovation project is likely to result in significant property renovation and remodelling such as structural works etc.
Ground up development finance
This type of finance is usually secured against an unencumbered site so in essence its financing 100% of the land value itself without any property attached to it. This option is used during the development stages of building work taking place on the property. Borrowers looking for this type of finance must be aware that they will need ‘Planning Permission’ to commence any property construction so you will require an integral part of the property development finance solution to actually get planning permission.
Senior debt finance
This option is designed for property renovations or developments where there are no current tenants and it may not even have planning consent yet. It can be used but it's often subject to a lender looking at several other criteria before agreeing to lend money. The most important factor in securing senior debt development financing is your track record as a developer.
Stretched senior finance
Borrowers use this term to refer to instances where they offer a property as security, but the property is not solely owned by them. In this case developers can become tenant in common with their lender and co-owners of the property whose value may be used as collateral for finance.
1. What percentage of funding does a property developer typically require for a new build property development?
Usually experienced developers will require between 20% and 35% of the total value of the property, but this will vary from project to project.
For example if a property cost £100k to refurbish then loans could provide up to 70%, but if it costs £500k then loans could provide up to 50%. It all depends on the lender's requirements and the risk profile of the property.
2. What can you use development finance for?
Development finance has many uses, and can include:
- Residential property development
- Commercial or Mixed-use Commercial property development
- Renovations & refurbishment
- Change of use & property conversions
- New builds
- Single unit developments to large multi-unit
- Finish & Exits
- Exit Financing
- Sales Period Funding
3. Can you get 100% development finance?
Its completely possible to obtain 100% development financing however, you'll need to provide additional security, usually in the form of property or land.
So how does financing a property development project work?
If a borrower is looking to purchase land with planning permission, or obtain a change of use on an existing building and develop it into 10 residential dwellings, they may first consider a bridging loan.
However the costs of construction would exceed the value of the only asset they have (the land or the building), and the short time scales inherent in bridging loans would not offer the time needed to successfully finish the construction – meaning that a bridging loan would not be a suitable choice for finance in this scenario.
Development finance allows up to 65% LTGDV to be raised against the initial asset, the land or existing building or 100% where the borrower offers additional security, and in addition to this up to 100% of the build costs for the actual development.
The build costs are divided into tranches and released/drawn down as the build schedule progresses. As the build schedule progresses the gross development value increases relative to the loan being drawn down ensuring that the LTGDV remains within the agreed lending criteria.
At the end of the construction, the property is usually either sold or refinanced using long term refinancing should the developer plan to keep the finished development for themselves to use or let.