Development Finance
Structured Funding for Residential Property Projects
Development finance is a specialised form of funding designed to support the construction, conversion, or substantial refurbishment of residential properties. It plays a crucial role in enabling property developers—whether individuals or companies—to undertake and complete building projects that require significant capital outlay during the development phase.
Unlike traditional mortgages or commercial loans, development finance is structured around the future value of the completed project—commonly referred to as the Gross Development Value (GDV). This forward-looking approach allows borrowers to access funding based on the anticipated market value of the property upon completion, rather than its current or pre-construction state.
Development loans are typically disbursed in a series of staged payments, often referred to as “drawdowns,” which are released at key milestones throughout the construction or renovation process. These stages may include site acquisition, groundworks, structural development, roofing, interior finishing, and final completion. Each drawdown is usually subject to valuation assessments or monitoring surveyor reports to ensure that the works are progressing in accordance with the agreed plans and budget.
Conclusion
Development finance is an indispensable tool for property developers seeking to bring residential projects to life, particularly when traditional funding options fall short of meeting the demands of large-scale construction or refurbishment. With funding based on the future value of the development and flexible, stage-based disbursements, it provides a dynamic solution tailored to the phased nature of property development.
