Property development finance

At a glance

Structure

Land advance + build tranches drawn in arrears

Sizing cap

Up to 65% of GDV on ground-up schemes (published broker figure, July 2026)

Term

12 to 36 months, matched to the build programme

Interest

Usually rolled up and repaid at exit

Repayment

One repayment at exit: sale or refinance

Scope

Ltd companies (usually an SPV), LLPs, partnerships of 4+

How the facility is structured: land tranche plus build tranches

A development facility has two working parts. The land tranche is released at completion of the purchase (or at refinance, if you already own the site) as a percentage of the site value. The build facility then funds the construction cost, but in arrears: the lender appoints a monitoring surveyor, you complete a stage of work, the surveyor inspects and certifies it, and the drawdown for that stage is released. The cycle repeats through the programme.

Two practical consequences follow. First, you need working cash to fund each stage before its drawdown lands, so a contingency buffer belongs in the appraisal, not just in the cost plan. Second, the monitoring cadence is a feature, not friction: it is what lets a lender advance against work that does not exist yet, and a clean paper trail with the surveyor keeps drawdowns fast.

The numbers lenders size on: GDV, LTGDV and cost

Development lenders cap the facility two ways at once. Against value: the total facility, including rolled-up interest, as a percentage of the gross development value of the finished scheme (loan to GDV, or LTGDV). Against cost: the facility as a percentage of total project cost, land plus build plus fees. The lower cap binds. As a published reference point, the broker Clifton Private Finance advertises borrowing up to 65% of GDV on ground-up projects, as published at July 2026 on cliftonpf.co.uk; individual lenders set their own caps around figures like these depending on scheme type, location and track record.

The gap between the facility and the total cost is the developer's equity. A conservative, evidenced GDV matters more than an optimistic one: lenders instruct their own valuation, and a scheme appraised on hopeful sales values gets cut back at credit, usually after you have spent money on the application.

What development finance costs

Pricing is monthly, charged on the drawn balance, and usually rolled up into the facility rather than serviced from cash flow during the build. On top of interest sit the deal fees: an arrangement fee, typically 1% to 3% of the facility per the same published Clifton Private Finance guide (July 2026), plus valuation fees, the monitoring surveyor's fees at each drawdown, legal costs and, with some lenders, an exit fee charged on the loan or on GDV at repayment. Because rates vary widely with scheme risk and developer experience, compare offers on the total cost to exit, all fees and rolled interest included, not on the headline monthly rate.

For what UK facilities cost across the wider market, with sources and dates, see current business loan interest rates.

The exit: sale or refinance

Development finance is repaid in one move at the end, so the exit is underwritten as hard as the build. There are two clean exits. Sale: the completed units sell and the proceeds repay the facility. Refinance: the finished asset moves onto longer-term debt, a commercial mortgage for a scheme the business will trade from or let commercially, or buy-to-let mortgages on residential units being retained.

When completion arrives before the sales do, a development exit loan repays the development facility and carries the scheme through the sales period at a lower rate, because the construction risk is gone. Published exit-finance terms reach up to 80% LTV on completed schemes (Clifton Private Finance, July 2026). That product sits in the same family as bridging finance; for where the boundary between the two products falls, see our guide to development finance vs bridging loans.

Which projects fit which product

### Matching UK property projects to the usual funding shape. Indicative product boundaries; lenders differ at the edges.

| Project | Usual product | Why |
| --- | --- | --- |
| Ground-up build on land with planning | Development finance | Land tranche plus monitored build tranches; sized on GDV |
| Heavy refurbishment or conversion | Development finance or heavy-refurb bridge | Structural work needs monitored drawdowns; lighter schemes fit a bridge |
| Light refurbishment before sale or letting | Bridging finance | Short, no staged drawdowns needed; repaid on sale or refinance |
| Completed scheme, units still selling | Development exit loan | Construction risk gone, so cheaper money carries the sales period |
| Finished asset the business keeps | Commercial mortgage | Long-term debt against a completed, income-producing property |

Source: FundBiz product pages, July 2026

Declined by a bank or a previous lender?

Development is a specialist market and mainstream declines are routine, especially for first schemes, thin track records or sites in less fashionable locations. The decline usually reflects the lender's policy box rather than the scheme's viability, and the specialist panel underwrites the project on its own numbers: the appraisal, the planning position, the contractor and the exit. Start with what to do after a business loan decline, and if the file carries adverse markers, bad credit business loans explains which routes stay open.

Eligibility

FundBiz arranges development finance for UK limited companies, LLPs and partnerships of 4 or more partners only. Sole traders are outside our scope. Most schemes borrow through a limited-company SPV, which is the structure lenders prefer anyway. Expect to evidence the site and planning position, a costed appraisal with contingency, your track record or your professional team's, and the exit. A debenture over the SPV and a personal guarantee are standard asks.

Related finance

For shorter, unmonitored property lending, see bridging finance and the bridging total cost calculator. If the exit is a refinance, the commercial mortgage page covers how lenders underwrite the finished asset, and the commercial mortgage calculator shows what the exit debt would cost per month. For plant and site equipment, asset finance keeps that spend off the development facility.

Frequently asked questions