Property Development Finance

finance for small property development projects
Speak to a broker

Property Development Finance

finance for small property development projects
Speak to a broker

Property Development Finance

Development finance is designed to help with the purchase and build costs for a residential development project.

Solutions are available for change of use, ground-up projects, refurbishment or major building work and property extensions.

Typically, secured loans are available to fund the land/building acquisition and the development costs, over a six to eighteen month period.

Once the project has been completed, the loan is usually repaid through the sale of the property. Some development loans are renewable, which can be a life saver in the event of an unforeseen time overrun.

Who can borrow?

Individuals, or Partnerships can borrow in their own capacity, or borrow through an SPV (Special Purpose Vehicle), set up for the purpose.

An SPV is usually a limited company set up just for that project and for that loan. Using an SPV does not negate the need for personal guarantees from the directors/shareholders of the SPV.

Development finance for first time developers is available.

What are the costs?

Each property finance application is costed on its own merits but the main costs will be:

  • Interest – charged monthly
  • Arrangement fee – can add to the loan
  • Legal costs
  • Valuation fees 


If you have a development finance enquiry that you wish to discuss, call us for an initial fee free discussion.

contact us 020 8301 7930
property developer

Loans are split in two

The loans are split onto two parts; typically up to 50% of the undeveloped “site” acquisition and up to 100% of the build costs, drawn down in stages.

Ordinarily, the total loan should not exceed 50-60 % of the Gross Developed Value (GDV). However, if some additional investment property/s can be offered as security, a higher percentage at any stage may be possible for the right proposition.

Establishing exit strategies

A property development loan is in effect a type of bridging finance, in that it is short term in nature. As such, any lender is going to want to know, how you are going to pay back the loan; your “exit” route, which needs to be well thought out and realistic.

What is development finance?

Development finance is short term funding for many different types of property based projects.

It is similar in nature to a bridging loan as it is short term finance that can be arranged quickly. You will usually pay only the loan interest during the term with the lender receiving full repayment on completion of the project or exit plan.

The funds raised can be used to purchase and build on land, for renovations and conversions and also for property auction finance. The completed project can be residential such as family homes or commercial such as shops and offices.

Ground up – This is where you are looking to purchase land, or demolish an existing building and replace with a residential or mixed-use scheme.

Development finance is available and used by property developers, companies and individuals.

100% development finance allows a developer to undertake a project without personal cash. This is also known as Joint Venture development finance, where the JV ‘partner’ takes a share of the profits for putting up all of the money.

What is residential development finance?

This is a type of development finance that is geared towards the building or conversion of residential units. These could be flats, apartments or houses.

Properties do not need to be habitable and funding is available for the initial purchase and also the refurb or building work.

Read more about Residential Development Finance.


Types of development project

One type is where a property already exists and needs either renovating or converting before being ready for use. Lenders all have their own definition of light and heavy refurbishment, but in general:

Light refurbishment

Mostly aesthetic changes rather than structural to the property. eg new kitchen, bathroom, windows, central heating.

light refurbishment finance

Heavy refurbishment or renovation

More involved work including moving internal walls, partial demolition, extensions, loft conversions and anything involving change of use or where consents are needed.

heavy refurbishment finance

Change of use conversions

Recent changes to the Permitted Development Rules (PDR) are designed to encourage the redevelopment of derelict and no longer used category ‘E’ buildings into dwellinghouses.

As many of these are uninhabitable, the short term nature of a development bridge loan is ideal for funding both the purchase and development costs.

Read more on How a Development Bridge Works.

Land Mortgages

A land mortgage will provide the funding you need to purchase a plot of land, with the mortgage secured against the land at the Land Registry.

Land mortgages can be used for many different purposes such as to purchase rural land, agricultural land, building plots or commercial developments. Loans are available for empty plots or for those that have existing buildings.

Read more on land mortgages.

Planning Gain Finance

One way to increase the value of a plot or a building is to get planning consent approved. Depending on the size and type of project this can drastically increase the profitability. Specialist finance called planning gain finance is available to assist with the initial purchase of a plot of land, commercial building or residential property.

Read more on planning gain finance.

Holiday Let Development Finance

Holiday let property development involves transforming a property into a holiday home for short-term rentals. These properties can range from traditional houses to more unusual structures such as farms, lighthouses, and even castles. The UK, with its rich history and diverse landscapes, offers immense potential for holiday let properties.

Read more on holiday let development finance.

Repayment of development finance

The lender will want to agree the exit strategy for a development loan at the outset, with full repayment either by sale or refinance. When assessing an application the lender will place a lot of weight on the strength of the exit strategy.

One way to repay the initial development finance is with development exit finance. This type of finance is accessible once your project has been fully completed or mostly completed. Then you can refinance with developer exit finance to reduce the interest costs and pull out equity if required.

Read more about Development Exit Finance.

Where the construction is not quite as advanced but additional funds and/or time are needed then Finish and Exit Development Finance can prove invaluable. This new facility will allow developers to refinance their existing development finance, continue with the development whilst providing extra time to build and sell any remaining units without the stress of default penalty interest.

Read more about Finish and Exit Development Finance.


We are well known for our knowledge in arranging property development finance, and we have helped hundreds of property developers to complete their projects.

We will take the stress out of securing property development finance for your project whatever its’ size.

Speak to an expert about DEVELOPMENT FINANCE

We can provide expert guidance and solutions for property development and bridging. With over 20 years experience as a bridging loan broker we are well placed to assist property developers.

Call 020 8301 7930 to start your journey with us.