Can suit ground-up development, conversions, heavy refurbishment and phased property works.
Development Finance
Development finance for property projects
Development finance can support build, conversion or refurbishment projects where costs, GDV, experience and exit route can be assessed.
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Planning status, build schedule, cost plan, gross development value and exit route are usually important.
Funding is often released in stages, so project timing and contingency planning matter.
When development finance may fit
Development finance may fit where a property project needs staged funding for land, build costs, conversion works or refurbishment. It is usually more specialist than a standard business loan because the lender needs to understand the project, professional team, security, costs and exit route.
It can be relevant for developers, builders, investors or businesses undertaking a property project for sale, refinance or occupation.
What lenders usually look at
Lenders may consider planning status, site value, build costs, contingency, gross development value, loan-to-cost, loan-to-value, borrower contribution, developer experience, contractor details, timetable and exit strategy.
Monitoring surveyors, valuations and cost checks can be part of the process, especially where funds are drawn in stages as work progresses.
What helps the enquiry
Useful details include site address, planning documents, schedule of works, cost plan, GDV evidence, professional team, experience schedule, borrower contribution, current ownership position and exit plan.
If the project needs additional funding behind senior debt, mezzanine finance may also be reviewed where lender appetite and project strength allow.
Benefits and considerations
Development finance can match funding to project stages and may allow a project to move ahead without the borrower funding all costs upfront.
The borrower should consider cost overruns, delays, planning risk, contractor risk, valuation changes, sales risk and refinance risk. Funding is subject to lender criteria and individual circumstances.
Development finance FAQs
Is planning permission needed for development finance?
Many lenders will want clear planning status before committing to a development facility. Some appetite may exist at earlier stages, but planning, professional team, cost certainty and exit route become critical parts of the review.
What is GDV in development finance?
GDV means gross development value, which is the expected value of the completed project. Lenders may compare the loan amount to GDV, total development cost and borrower contribution when assessing the funding structure.
How are development finance funds released?
Development finance is often drawn in stages as work progresses. Monitoring surveyors, valuations and cost checks may be used before drawdowns, so the build schedule and contingency planning matter.
Can first-time developers apply?
Some lenders may consider first-time developers, but experience, professional support, contractor strength, borrower contribution and project complexity become especially important. A simpler project, strong professional team and clear contingency plan can help the application make more sense.