Understanding Development Finance
Development projects, whether ground-up schemes, major refurbishments, or adaptive reuse, require finance that reflects both ambition and nuance. In today’s market, where lender appetite is cautiously optimistic and project risk is closely examined, securing the right facility means more than borrowing capital. It means structuring it with foresight.
At Henry Dannell, we act as a trusted development finance broker, supporting clients across the UK in navigating the full spectrum of property development finance options. This article offers clarity on how borrowers can secure funding for new builds, refurbishments, and conversions, and effective exit strategies, with insight into development finance UK trends, eligibility, and structuring opportunities.
Understanding Development Finance
What Is Development Finance?
Development finance is a short to medium-term funding solution used to support the construction, refurbishment or conversion of property. It is usually secured against the site and repaid through sale or refinance. Common categories include:
- Residential development finance for residential housing
- Commercial development finance for office, retail, or mixed-use properties
- Mixed-use development finance combining residential and commercial elements
- Refurbishment development finance for assets requiring modernisation
- Conversion development finance, e.g, office-to-resi or barn conversions
- Self-build development finance for individual plots or bespoke homes
- Bridging development finance for short-term or time-sensitive scenarios
A growing number of clients also explore:
- Mezzanine development finance to top up senior debt
- Joint venture development finance, where capital contribution is limited, but experience is strong, so partners come together to increase available capital
Ground-Up Projects: Laying the Right Financial Foundations
For new build schemes, particularly ground-up, the focus is on viability, experience, and end value. Lenders assess:
- Site acquisition cost and planning status
- Detailed build costs and contingency
- GDV and proposed exit
- Developer experience and track record
Loan-to-GDV Explained
Most lenders offer up to 70% Loan-to-GDV, though higher leverage may be available for stronger projects or those with mezzanine finance.. Some structures also consider Loan-to-Cost (LTC), typically capped at 85%, which reflects total expenditure rather than future value.
Do I need a broker for development finance?
Absolutely. A broker is essential for securing the right deal. Finding the best funding solution that perfectly suits your specific project requirements is crucial to success, and this requires deep market knowledge and established lender relationships that only experienced brokers possess.
Why is a mortgage broker always needed?
Market expertise – Brokers understand current lender appetite, rate movements, and which funders are actively backing different types of developments. The development finance market changes rapidly, and what worked six months ago may not be the best option today.
Access to exclusive deals – Many lenders offer their most competitive rates and terms exclusively through broker networks. Going direct often means missing out on better pricing and more flexible structures.
Project-specific matching – Each development has unique characteristics – location, complexity, timeline, exit strategy. Brokers can identify which of the 50+ active development lenders will view your project most favorably and offer the best terms.
Managing the journey – Development finance applications are complex and lengthy. Brokers handle all the bumps in the road – from initial structuring through legal completion. They manage lender queries, coordinate valuations, liaise with solicitors, and keep deals on track when issues arise.
Narrative shaping – How you present your project makes a huge difference. Experienced brokers know how to position applications to highlight strengths and address potential lender concerns before they become problems.
Whether you’re a first-time developer or managing complex multi-phase schemes, professional broker support is invaluable for securing optimal funding and ensuring smooth project delivery.
Refurbishments and Conversions: Repurposing with Precision
Refurbishment development finance supports projects involving internal upgrades or structural changes to existing assets. This might range from light improvements to full-scale repositioning. Where use class is changing, conversion development finance becomes essential, for instance:
- Funding for commercial-to-residential conversions
- Development finance for barn conversions
Can I get development finance for mixed-use? Yes, specialist lenders cater to both asset types in one facility.
Development Finance Eligibility
- Clear schedule of works and costings
- Evidence of planning approval (if needed)
- Security valuation reflecting both the current and post-work state
- Contractor or developer credibility
Projects with part-vacant assets or retained income streams can be structured creatively, often using bridging development finance during transitional phases.
Exit Strategies: Planning Beyond Practical Completion
How to exit development finance with a commercial mortgage
A critical, often underutilised stage of development is the exit. Whether refinancing into a term facility or selling the units, understanding development finance exit strategies is essential to protect profit and ensure liquidity.
Common routes include:
- Refinance into a commercial mortgage
- Short-term bridge while sales or lettings are completed
Exit is typically assessed on:
- Achieved or projected rental income
- Valuation of completed assets
- Borrower’s wider portfolio and liabilities
Navigating the Application Process
How to apply for development finance
A successful development finance application depends on clear documentation and credible forecasting. The following are typically required:
- Detailed project appraisal and feasibility study
- Planning documentation and building schedule
- Evidence of equity contribution
- Valuation report
- Planning permissions and building regs approval
- Costings, contracts, and insurance details
- Exit strategy evidence (sales agents, comparables, etc.)
- Business structure and SPV details (if applicable)
Our team uses a structured process, drawing on access to trusted development finance lenders, including specialist lenders for new build developments and development finance for non-standard properties.
Conclusion: A Cohesive Approach to Funding Property Projects
From securing ground-up development finance to navigating exit into investment mortgages, a joined-up strategy is essential. At Henry Dannell, we provide tailored support at every stage, not only matching you with the right development finance lenders but helping structure facilities aligned with your commercial goals.
Whether you are a first-time developer seeking development finance or an experienced operator requiring access to specialist development finance deals, our advisers are on hand to guide you through the complexity with clarity and confidence.
To explore your next opportunity or review an upcoming development finance application, we welcome the chance to speak.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. A bridging loan is a short-term loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any debt secured on it. The Financial Conduct Authority does not regulate some forms of bridging finance. Bridging finance / loan deals may not be available and lending is subject to individual circumstances and status.