Skip to Main Content

Out of the ground! Placing property development finance deals

Current availability of finance for new build property developments.

I thought I would just share with you some of the typical deals that pass across our new build development finance desk daily to give an insight into the types of funding we can obtain for your clients.

Finance for experienced property developers

Lots of the brokers with whom I work have clients who are:

  • Property developers with one or two “out of the ground” projects under their belts
  • Individuals who have worked (or who are still working) in the construction industry and are now looking to start some of their own “out of the ground” projects.

Typically, finding finance for these clients is relatively straightforward. For us, the key is understanding the level of funding required and ensuring the development proposal plan is documented in a way that whets the appetite of the lender. As all lenders have their own way of assessing deals, it often means that we need to rejig the paperwork.

Current pricing

Rates very much depend on the amount of leverage your client requires. Typically, we would work with first, second and third tier lenders on the follow basis:

Tier 1 lenders:
If the funding requirement is around 60-65% of costs and no more than 50-55% of the gross development value (GDV) then we have access to lenders which will look to assist at an interest rate of say 4% above Bank Rate plus fees of 1.5% in and 1.5% out of the loan value.

Tier 2 lenders:
Should the funding requirement be higher, there are lenders which will advance 60% of the land purchase price and 100% of development costs if the total borrowing is no more than 65% of GDV. Interest rates are in the region of 5.5% above Bank Rate and just an in fee of 1.5% with no exit fee. Disappointingly, it’s worth noting that these lenders only operate in the Home Counties at present.

Tier 3 lenders:
If finance is required up 80% of costs but no more than 65% of GDV, we have access to lenders who will typically offer your clients rates of around 7.5% (not above base rate) plus arrangement fees of 2% in and 1.5% out on the loan amount.

Finance for property developers with no experience

Another typical scenario we see is one where a broker contacts us trying to place a deal for someone who has absolutely no property development experience whatsoever. Usually, their client has secured planning permission on land they already own (often in their garden or buy to let property) and they want finance to build property to sell on or rent out. 

Funding can be found - usually shorter term finance - but the key is to ensure that the clients have:

  • A robust business/development plan in place. We can help put this together in a format that will appeal the most suitable lender
  • An experienced team of contractors who will take on the build and management of the project.

Current pricing

As you might expect, pricing tends to be higher as lenders perceive the risk to be greater. Currently, finance is typically available up to 60% of the land purchase price plus 100% of development costs, up to a maximum loan of 65% of GDV with arrangement fees of 3% in and a 2% out (of the loan amount not GDV).

Project monitoring

Regardless of the experience of the developer, most lenders will require an independent monitoring surveyor (IMS) to be appointed to check the progress of projects. The IMS signs off each stage of the development so that the lender can be comfortable that the loan tranche can be drawn down. Their involvement can add some £10,000 a project. This can be significant for sub-£500,000 deals, so it’s worth bearing in mind that we do have access to a lender which will consider sign-off of the works against the certification of the client’s own architect on smaller deals.

Your client should factor in around £1,700 + VAT for the first report and then £700 + VAT per site visit.


It’s hard to be specific because each case is judged on its own merits and much will depend upon how organised your client is with paperwork. Usually, the most time-consuming part is putting the deal together in the right format for the right lender. We’ll work with you to get this organised and you should be prepared to chivvy your client!

Once the application goes in the project has to be valued, underwritten and go through the IMS and legals so realistically we’re looking at a minimum of six weeks until the first tranche of funds can be released.

However, in our experience, if the client has got all the documentation together in support of the application, the process can take around six weeks – but always expect more!

Commission varies and often depends on the tier of lender but we’ll always have a frank discussion with you on this. Sometimes we split lender commission 50/50 but it does depend on the complexity of the deal. Some lenders might not pay commission, so it will be down to us to agree what to charge the client.


What we need to get started

In the first instance, I suggest you pick up the phone to chat through the deal, then to get the ball rolling, we would need to see as much of the following information as you are able to extract from your clients:

  • Full details of the development project and location
  • Developer’s CV / evidence of previous projects / capability statement
  • Detailed estimate of build cost
  • Estimated plans (including copies of any drawings etc.)
  • Any comparable evidence for end GDV / evidence of likely re-sale value
  • Evidence of any planning consents granted
  • Details of any proposed contractors
  • Asset & liability statement - fully completed and signed for all parties to the loan
  • Latest 6 months’ bank statements, main personal account(s) and company account(s)
  • Details of personal income with evidence i.e. 3 years’ P60s, SA302s or audited accounts

I hope this helps. We are happy to chat through any scenario, so do get in touch. You can call me directly on 01732 471655 or email


Property development finance case studies:

>> Finance for first-time developers building house in garden

>> £1.3m for house-builders to construct second phase of 50+ housing estate

>> 100% build costs for new build detached house