Development Finance: The Complete Guide for UK Developers
A comprehensive guide to development finance — how it works, what lenders look for, and how to structure your project for maximum returns.
Development finance is specialist funding for property development projects. Whether you are building a single house or a 100-unit apartment block, understanding development finance is crucial.
What is Development Finance?
Development finance is short-term funding for construction projects. It typically covers land purchase and build costs, with interest often rolled up until the project is completed and sold or refinanced.
How Much Can You Borrow?
Lending is based on two key metrics:
- LTGDV (Loan to Gross Development Value): Typically up to 60-65% of the completed project value
- LTC (Loan to Cost): Typically up to 70-80% of total project costs
What Lenders Look For
- Experienced developer or team
- Viable development scheme
- Planning permission (detailed preferred)
- Clear exit strategy (sale or refinance)
- Realistic budget and timeline
The Application Process
- Initial discussion and project appraisal
- Lender selection and term sheet
- Valuation and monitoring surveyor
- Legal work
- Facility offered and first drawdown
Funds are released in tranches at agreed construction milestones, verified by a monitoring surveyor.
Could this apply to your business?
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This article is published for general information only and does not constitute financial, tax, accounting or legal advice, or a recommendation to apply for any product. Any rates, LTV ranges, fees, timelines, tax rules or government schemes mentioned are indicative and reflect general market norms at the time of writing; they may change and should be confirmed with a specialist before acting. Read our editorial policy to see how we produce and review our content.