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Property development finance is a short-term, interest-charged facility designed to fund the costs of building, converting, or significantly refurbishing a property from the start of construction through to practical completion. Unlike a standard mortgage, the facility is drawn down in staged tranches as the build progresses, with interest typically rolled up into the loan balance and repaid on the sale or refinance of the completed units.
Lenders assess development projects differently from residential mortgage lenders. They focus on the gross development value of the finished scheme, total project costs including site acquisition, build costs, professional fees and finance charges, the developer’s track record, the quality of planning consent, and the robustness of the exit strategy. At Square Gain Capital, we work with residential and commercial developers across London and the South East and have direct relationships with specialist development lenders who operate exclusively through intermediaries.
In 2026, the UK development finance market is more competitive than at any point in recent years. Specialist lenders, challenger banks, and an expanding number of property debt funds have entered the space, creating genuine competition on rates and terms for developers who present their cases clearly and work with brokers who know this market.
The borrower base is wide. First-time developers working on a single residential conversion sit alongside experienced housebuilders running multi-unit new-build schemes. Portfolio landlords converting large houses into licensed HMOs, commercial investors redeveloping redundant offices or retail units into residential use, and land promoters funding planning applications before a site reaches its full value are all regular users of development finance products.
A bridging loan is typically a single advance against an existing asset, used to move quickly or to bridge a short timing gap. Development finance is purpose-built for construction projects and uses a staged drawdown structure: rather than advancing the full facility on day one, the lender releases funds at agreed stages of the build, certified by an independent monitoring surveyor who inspects the works. This structure protects the lender and means the borrower pays interest only on funds actually drawn, reducing the effective cost of finance during the build period.
Most development finance facilities offer rolled-up interest, meaning monthly interest is added to the loan balance rather than paid in cash. This preserves the developer’s working capital for the build and is modelled into the project cost appraisal from the outset. Some lenders offer a serviced option at a lower headline rate for developers with strong cash flow from other sources. We model both options for every case so the true cost is clear before any commitment is made.
We advise on every major development finance product type available in the UK market. Each has its own lender panel, assessment criteria, and application process. Our advisers work across all of the following product areas.
Ground-up construction finance for residential schemes from a single detached dwelling to large housing developments. Staged drawdown against architect-certified build stages, with loan to GDV typically up to 70 to 75 percent and loan to cost up to 85 to 90 percent for experienced developers.
Construction finance for offices, retail units, industrial buildings, care homes, hotels, and mixed-use developments. Lender appetite is more selective than for residential, and end-value assessment is driven by projected yield and rental income rather than comparable sales evidence.
Short-term bridging-style finance for cosmetic improvements that do not require planning permission. Kitchen and bathroom refits, re-wiring, re-plumbing, re-roofing, and new windows all fall within light refurbishment. Fast decisions, with exit routes to a BTL mortgage or sale.
Finance for structural works, changes of use, and conversions that require planning permission. Converting a commercial building to residential, carrying out significant structural modifications, or extending beyond permitted development rights all require lenders with development finance experience and appetite for planning risk.
Acquisition finance for development land with or without planning permission. Lenders assess the prospective GDV once consent is achieved. We also arrange standalone planning bridge loans for developers who own land and need to fund the planning application process before developing.
Second-charge finance that sits behind the senior development loan to increase total project capital. Mezzanine lenders charge higher rates than senior lenders but allow developers to increase leverage without committing additional equity. Preferred equity and profit-share structures are available for larger schemes.
Going directly to a development lender is possible in some cases, but the majority of specialist development lenders in the UK operate exclusively through intermediaries. Even those who accept direct applications often reserve their best rates and terms for professionally packaged broker submissions.
We have established relationships with lenders who do not publish their contact details publicly. These lenders provide informal feedback before a formal application is submitted, saving time and protecting your credit file from unnecessary searches.
Lenders assess developers, not just projects. Track record presentation, the completeness of the information pack, the quality of the cost schedule, and the credibility of the GDV assumption all influence both the credit decision and the rate you receive. We help you build the strongest possible case before any lender sees it.
Auction purchases require completion within 28 days. Option agreements have expiry dates. Pre-existing lender relationships and a track record of clean submissions can reduce the time from enquiry to facility agreement from months to weeks on straightforward schemes.
Most brokers disappear once the facility is agreed. We stay involved throughout the build. If a drawdown is delayed, costs overrun and a facility increase is needed, or the exit strategy requires review, we are available to navigate those conversations with the lender on your behalf.
Development finance transactions are more involved than standard mortgage applications but follow a logical sequence. Understanding each stage before you start saves time and avoids surprises that can delay or derail an otherwise fundable project.
The starting point is a full project appraisal setting out the site acquisition cost, build costs including contractor quotes and contingency, professional fees, finance costs, and the anticipated GDV on completion. We review the appraisal with you, stress-test the key assumptions, and give you a realistic view of what lenders will advance before any lender is approached.
Based on the project appraisal and your track record, we identify the lenders most suited to the scheme and approach them for indicative terms. A well-prepared information pack at this stage, including a scheme summary, planning history, QS cost schedule, and developer CV, produces meaningfully better terms than an informal enquiry.
The chosen lender appoints an independent RICS-qualified valuer to assess the site value and the GDV of the completed scheme, and a monitoring surveyor to review the build costs and contractor credentials. Both reports feed the formal credit decision. This stage typically takes two to four weeks.
Once credit is approved, solicitors on both sides complete the facility agreement. The initial drawdown covers site acquisition and initial mobilisation costs. Subsequent drawdowns are released against the monitoring surveyor's certification of each agreed build stage.
On practical completion, the developer repays the facility from unit sale proceeds or by refinancing onto a standard BTL or commercial mortgage. We plan the exit route at the outset and monitor market conditions throughout the build to ensure the exit completes without delay.
Development projects rarely follow a straight line. Here are some of the situations our advisers help developers work through every week.
First-time developers can access development finance, but the route is different. Lenders compensate for limited developer experience by focusing on the build team’s track record, the quality of the contractor, and the monitoring surveyor’s credentials. Smaller projects with strong planning consent and experienced professionals around them can attract funding even for a first scheme.
Cost overruns are a normal part of property development. Most lenders have a process for facility top-ups where the project appraisal still supports the increased loan. We work with your existing lender where possible, or identify a new lender to refinance and increase the facility where the original lender cannot accommodate the change in scope.
Several lenders who were active in development finance before 2023 have since reduced their books or withdrawn entirely. If a facility is being called in before the build is complete, we arrange emergency refinancing with a lender who can take over and fund the remaining works through to practical completion.
A well-prepared submission to the right lender can complete in four to six weeks for straightforward schemes. The speed difference between direct applications and broker-submitted cases is significant when a planning consent has an expiry date or an option agreement is approaching its deadline.
Planning applications typically take three to twelve months and cost between £20,000 and £150,000 in fees for a residential scheme. Land owners can raise short-term finance against the existing value of the land to fund the application process, repaying when consent is granted and the land is sold or developed.
Speak to an adviser to discuss your circumstances and find out how we can help.
Clear,honest answers to the questions we hear most from clients and introducers.
Most facilities run for 12 to 24 months depending on scheme size and complexity. Smaller refurbishments or conversions may complete in six to nine months. Larger ground-up schemes of 20 units or more may need 18 to 24 months. Extensions are available where construction takes longer than anticipated, though additional fees usually apply.
Yes, though the lender choice is narrower and loan-to-cost is typically lower, usually up to 75
percent rather than the 85 to 90 percent available to experienced developers. Build team quality,
planning strength, and project location carry more weight when developer experience is limited.
Loan to cost, or LTC, expresses the loan as a percentage of total project costs including land, build, fees, and finance charges. Loan to GDV expresses the loan as a percentage of the completed scheme’s value. Senior development lenders typically lend up to 70 to 75 percent of GDV and up to 85 to 90 percent of total costs, depending on developer experience.
Yes. Most development finance lenders offer full roll-up, meaning no cash interest payments during the build. The rolled-up interest is included in the facility and repaid on exit. The effective cost is higher than a serviced facility because interest compounds, but it preserves developer cash for the build itself.
The facility is split into a land advance drawn at completion and a series of build drawdowns agreed at the outset against the schedule of works. At each build stage, the monitoring surveyor inspects the site and certifies the percentage of works completed. The lender releases the next tranche against that certification, typically within five to ten working days of the report being submitted.
We search the market and handle the process so you can focus on moving.
Whole of market search across a wide panel of lenders
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We handle the paperwork and liaise with lenders on your behalf
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