Lenders evaluate applications based on:

• Experience: Your property development track record or the expertise of your team.
• Project Plan: A detailed, costed plan including labor, materials, and contingencies.
• Financial Standing: Personal and business credit history, bank statements, and income.
• Planning Consent: Proof of approved planning permissions.
• Exit Strategy: A clear repayment plan, such as selling the property or refinancing. Lenders will also consider the demand for your property in the local market.

While having planning permission makes it easier to secure funding, some lenders may accept applications without it, especially if you’re an experienced developer. In such cases, proof of a planning application and a viable improvement plan may be required.

Loan amounts depend on:

• Gross Development Value (GDV): Typically up to 70% of GDV.
• Total Project Costs: Up to 85% of costs, including land and construction.
• Equity Contribution: Developers are often required to invest a portion upfront. Example: For a £4.5m GDV project with £3.1m total costs, a lender might provide £2.325m, with funds released in stages.

Development finance terms range from 12 to 24 months, depending on the project size and complexity. Extensions may be possible if more time is needed to complete or sell the development.

Common costs include:

• Interest Rates: Starting from around 7.5% annually.
• Arrangement Fees: Typically 1–2% of the loan amount.
• Exit Fees: Usually 1–2% of the loan or GDV.
• Valuation and Monitoring Fees: Covering property valuations and project assessments.
• Professional Fees: Costs for architects, surveyors, and legal advice. Transparency is key—ensure you understand the full cost structure before committing.

• Senior Debt: The primary loan, secured against the property.
• Mezzanine Finance: Bridging the gap between senior debt and equity, often used to maximize leverage.
• Preferred Equity: Flexible funding with structured returns, sitting between mezzanine and common equity. Each layer of funding contributes to the project’s overall financing strategy.

Yes, in specific scenarios:

• Land Ownership: If you own the land outright.
• Improved Planning Consent: Enhancing the land’s value post-purchase.
• Joint Venture Agreements: Partnering with equity investors. A strong proposal and equity contribution can increase your funding potential.