Development Finance

Through a specialist development finance loan. These are structured to match how a build actually works: the lender funds a percentage of the land purchase upfront, then releases the build costs in stages as work is completed and signed off by a monitoring surveyor. Interest is usually rolled up into the loan rather than paid monthly, so you’re not servicing it out of cash flow during the build.

Typically up to 65-70% of the Gross Development Value (GDV), which is the expected end value of the finished scheme. The lender will fund a significant part of the land cost and 100% of the build costs in stages, as long as the total stays within that GDV percentage. Understanding your GDV is central to working out how much you can borrow.

Yes. First-time developers are welcome in the market, though lenders usually want to see a strong team around you, a good builder, architect, and quantity surveyor with a track record. The lender is essentially funding the team as much as the individual. We’ve helped plenty of first-time developers get their first scheme off the ground.

In most cases, yes. Development finance is designed for builds, the structure and staged drawdowns match how costs actually arise. Using a bridging loan to fund a full development often ends up more expensive and riskier, because you’re borrowing the whole build cost upfront and paying interest on money you haven’t spent yet. Bridging is better for quick purchases or short refurbishments, and development finance is better for ground-up builds or major conversions.

GDV is the expected end value of the finished development, what you’ll sell or refinance at once it’s complete. Lenders cap their loan at a percentage of GDV, usually 65-70%. So if your GDV is £1m, the maximum loan might be £650-700k, with the rest coming from your own equity and the build profit margin. Getting the GDV right is crucial; if it’s overstated, the whole project can unravel.

Build costs are released in stages as the work is completed, rather than all at once. A monitoring surveyor visits the site at each stage, confirms the work has been done to the right standard, and signs off on the next tranche of money. The stages typically match recognised construction milestones: foundations, wall plate, roof on, first fix, second fix, and completion. It protects both you and the lender.

The exit is how you repay the loan at the end. The two most common routes are selling the finished units, or refinancing onto a term mortgage (a Buy to Let if you’re keeping them to rent, or a commercial mortgage if owner-occupied). Lenders want a credible exit plan from day one, a strong exit often matters more than the build itself.

You’ll typically need to fund around 30-35% of the land purchase yourself, plus professional fees, and sometimes a small contribution to early build costs. The lender funds the remaining land purchase and 100% of the build costs in stages. Some deals can be structured with less cash in from the developer if the seller agrees to deferred consideration on the land, which can be a real game-changer on the right deal.