Typical Terms
Indicative ranges — actual terms depend on individual project assessment.
What is Development Finance?
Development finance is a specialist form of property lending designed specifically for construction and development projects. Unlike standard mortgages or commercial loans, development finance is structured around the unique cash flow requirements of a build programme — funds are released in stages as construction progresses, monitored by an independent surveyor who certifies each drawdown against pre-agreed milestones.
For developers operating in Brent, development finance is the cornerstone funding mechanism for projects ranging from small-scale Victorian house conversions in Kilburn to large residential schemes in the Wembley regeneration zone. The facility is typically secured by a first legal charge over the development site, with the land and partially completed works providing the lender's security throughout the build period.
Key Parameters
Development finance is assessed against two primary metrics that determine the maximum facility available:
Loan to Cost (LTC)
The facility as a percentage of total development costs, including land acquisition, construction, professional fees, and contingency. Typically up to 70–75% LTC for experienced developers with strong projects.
Loan to GDV
The facility as a percentage of the Gross Development Value — the estimated market value of the completed scheme. Typically capped at 60–65% of GDV, providing the lender with a margin of safety against value fluctuations.
The actual facility offered is the lower of the LTC and GDV calculations. Interest rates for development finance can start from around 0.65% per month, though rates depend on multiple factors including borrower experience, project location and quality, loan size, and the overall risk profile. Loan terms are typically 6–24 months, aligned with the anticipated build programme and sales or refinance period.
The Application Process
Securing development finance follows a structured process designed to give both the borrower and lender confidence in the project's viability:
Initial Assessment
We review your project details — site, planning status, build programme, cost plan, and target GDV. Based on this, we provide an initial view on feasibility and likely terms. This stage typically produces indicative terms within 24 hours.
Lender Matching & Term Sourcing
We approach suitable lenders from our panel of 100+, presenting your project with full supporting documentation. Different lenders suit different project profiles — our role is to match your scheme to the lenders most likely to offer competitive terms.
Formal Application & Valuation
Once you select a preferred lender, a formal application is submitted. The lender instructs an independent RICS valuation, which assesses both the current site value and the projected Gross Development Value. This valuation underpins the facility offer.
Credit Approval & Legal
The lender's credit committee reviews the application, valuation, and supporting documentation. Upon approval, facility documentation is prepared by the lender's solicitors and reviewed by your legal team. This stage typically takes 2–4 weeks.
Completion & Initial Drawdown
Once legal conditions are satisfied, the facility completes and the initial tranche (typically covering the site acquisition) is released. A monitoring surveyor is appointed to oversee subsequent drawdowns.
Construction Drawdowns
As construction progresses, you submit drawdown requests against the agreed build programme. The monitoring surveyor inspects the works and certifies each tranche for release. This staged approach ensures funds are available as needed while providing the lender with ongoing oversight.
The Capital Stack
Understanding the capital stack is essential for structuring development funding. The capital stack represents how a project is funded, from the most senior (lowest risk, lowest cost) to the most junior (highest risk, highest return):
By combining senior debt with mezzanine finance or equity, developers can reduce their personal capital commitment and potentially fund multiple projects simultaneously. We specialise in structuring the optimal capital stack for each project, balancing leverage, cost, and complexity.
Development Finance vs Other Funding Types
| Feature | Development Finance | Bridging Finance | Mezzanine Finance |
|---|---|---|---|
| Purpose | Construction & development | Purchase & light refurb | Top-up leverage |
| Typical Term | 6–24 months | 1–24 months | Aligned with senior |
| Security | First charge | First charge | Second charge |
| Drawdown | Staged / monitored | Day one (full or retained) | Aligned with senior |
| Typical Rate | From ~0.65% pm | From ~0.55% pm | From ~1.0% pm |
| Monitoring | QS / surveyor required | Usually not required | Via senior facility |
Suitable Project Types
Common scenarios where development finance is used in Brent.
Example Scenarios
Illustrative examples of how similar facilities could be structured — not completed transactions.
Residential Development, Wembley Park
Victorian Conversion, Kilburn
Mixed-Use Scheme, Willesden Green
Frequently Asked Questions
Common questions about development finance.
Ready to Discuss Your Project?
Get indicative terms for your development project. Our team specialises in structuring development finance for Brent developers.