London Development Finance FAQ

Development finance is a specialist short-term loan designed to fund the construction or conversion of property. Unlike a standard mortgage which is based on the current value of a completed property and repaid over 25+ years, development finance is structured around the gross development value (GDV) of the completed scheme and is typically repaid within 6 to 24 months. Funds are drawn down in phases as construction progresses, and interest is usually rolled up rather than paid monthly. Learn more about the different types of funding available on our services page.

The amount you can borrow depends on the finance type and the strength of your scheme. Senior development loans typically provide 55-65% of the gross development value (GDV) and up to 80% of total costs. With mezzanine finance layered on top, total borrowing can reach 75-90% of costs. Joint venture equity partnerships can fund 90-100% of total development costs on a profit share basis. We arrange facilities from £150,000 to £50 million and above for London developments. Use our development finance calculator to model your specific borrowing requirements.

Rates vary by product type and risk profile. Senior development loans start from 6.5% per annum. Stretch senior facilities begin at around 8% per annum. Mezzanine finance typically starts from 12% per annum. Development exit finance is available from 0.55% per month. Permitted development finance starts from 7% per annum. The actual rate you receive will depend on your track record, the scheme's fundamentals, the loan-to-value ratio, and the security position. We present the full cost breakdown before you commit, including arrangement fees and other charges. View the full details on our services page.

LTV stands for Loan-to-Value, which measures the loan amount as a percentage of the gross development value (the estimated value of the completed scheme). LTC stands for Loan-to-Cost, which measures the loan as a percentage of the total development costs (including land, construction, fees, and finance costs). Both metrics are used by lenders to assess risk. For example, a scheme with a GDV of £5 million and total costs of £3.5 million might secure 60% LTV (£3M loan) or 85% LTC — the lower figure determines the actual loan amount. Learn how these metrics affect your borrowing on our how it works page.

Our typical timeline from initial enquiry to first drawdown is 3 to 6 weeks. Straightforward schemes with experienced developers and confirmed planning permission can complete in as little as 3 weeks. More complex structures involving mezzanine or JV equity, or schemes requiring additional due diligence, may take 6 to 8 weeks. Development exit finance, where construction risk has been removed, can complete in 2 to 3 weeks. We provide indicative terms within 48 hours of your initial enquiry. See the full step-by-step timeline on our how it works page.

We arrange development finance across all 33 London boroughs, covering both Inner and Outer London. This includes high-activity areas such as Tower Hamlets, Southwark, Hackney, Newham, and Lambeth in Inner London, and growth boroughs such as Barking and Dagenham, Croydon, Barnet, and Ealing in Outer London. Each borough has distinct planning requirements, development patterns, and market dynamics that we understand in detail. Visit our boroughs page to explore development finance in your specific area.

Yes, through our JV equity partnerships, it is possible to secure funding for 90-100% of total development costs. In this structure, an equity partner funds your share of the project in exchange for a proportion of the profits (typically a 50/50 to 70/30 split in favour of the developer). You contribute your development expertise, site sourcing, and project management rather than cash equity. These structures are most suitable for developers with a proven track record and schemes with strong profit margins of 20% or more. Learn more about JV equity on our services page.

Mezzanine finance is a second-charge loan that sits behind your senior development facility, filling the gap between what the senior lender provides and the equity you need to contribute. It typically takes total borrowing from around 65% to 75-90% of total costs, reducing your equity requirement to as little as 10%. Mezzanine is most useful when you want to take on a larger scheme than your equity position allows, run multiple schemes simultaneously, or preserve capital for other investments. Interest is usually rolled up during the term. Read the full breakdown on our services page.

Typical fees include: an arrangement fee (1-2% of the loan facility, paid on completion), a broker fee (we are transparent about our charges), valuation fees (paid to the RICS surveyor, usually £3,000-£10,000 depending on scheme size), monitoring surveyor fees (quarterly or monthly, typically £500-£1,500 per visit), legal fees for both your solicitor and the lender's solicitor, and an exit fee in some cases (0.5-1% of the loan). We provide a comprehensive cost schedule upfront so there are no surprises. Contact us for a transparent fee breakdown for your specific project.

Yes, we specialise in arranging finance for permitted development (PD) conversions across London. This includes Class MA (formerly Class O) office-to-residential conversions, as well as other PD rights routes. Our PD finance starts from 7% per annum with up to 65% LTV and 80% of costs funded. PD conversions have been particularly active in boroughs such as Croydon, Hounslow, Harrow, and Hillingdon. The key requirements are a valid prior approval determination, a suitable building condition, and units that meet minimum space standards. See our services page for full PD finance details.

Development exit finance is a specialist bridging product that refinances your development loan once construction is complete but before all units have sold. Available from 0.55% per month, it is significantly cheaper than maintaining a full development facility during the sales period. You might need it if your build completes but units are still selling, if you want to avoid pressure to accept discounted offers to meet a loan expiry date, or if you wish to retain some units as a rental portfolio. It typically completes in 2-3 weeks. Learn more about development exit finance on our services page.

Development finance is drawn down in phases rather than as a single lump sum. The first drawdown typically covers the land purchase (net of your equity contribution). Subsequent drawdowns are released monthly, certified by the lender's monitoring surveyor who visits the site to verify completed works. Each drawdown request is supported by a Quantity Surveyor certificate confirming the value of work done. You only pay interest on the funds actually drawn, keeping costs lower during the early build stages. Our how it works page explains the full drawdown process step by step.

The primary security is a first legal charge over the development site and the completed property. For mezzanine finance, a second charge is taken behind the senior lender. Lenders also typically require personal guarantees from the directors or principal shareholders of the borrowing entity (usually limited to the cost overrun guarantee or a percentage of the loan), an assignment of the building contract, professional team warranties, and insurance assignments. Some lenders may require additional cross-collateral security on other assets. We explain all security requirements clearly before you commit.

Yes, many of our clients run multiple London development schemes concurrently. Each scheme is typically financed independently with its own facility, although some lenders offer portfolio or programme facilities for experienced developers. The key considerations are your total net worth relative to the aggregate borrowing, your management capacity to oversee multiple builds, and the combined exposure to any single lender. We often structure programmes where equity released from completed sales on one scheme funds the equity requirement on the next. Contact us to discuss your development pipeline.

In most cases, you need at least a resolution to grant planning permission (subject to Section 106 agreement) before a lender will issue a formal facility offer. However, we can begin discussions and provide indicative terms while your planning application is live. Some lenders will fund pre-planning land acquisitions with appropriate conditions and pricing adjustments. For permitted development schemes, you will need a valid prior approval determination before drawdown. We recommend engaging with us early in the planning process so that finance is ready when permission is confirmed. Visit our how it works page for the full process timeline.