Securing funding for property developments in the UK can often be a critical hurdle. Without funding, property developers can be limited in what they are able to achieve. Yet the concept of 100% development finance has gained attention as a possible solution for funding. Regardless of whether you’re a seasoned developer or a newcomer to the industry, understanding how development finance and other types of funding work is crucial.

What Is 100% Development Finance?

As the name suggests, 100% development finance involves securing the total amount of funding needed for a property development project. This funding will typically cover all costs including land acquisition, planning permissions and architectural designs, as well as the construction work itself. UK developers can therefore access the funding they need without investing their own capital into the project.

Is It Possible To Get 100% Development Finance?

Despite the idea of obtaining 100% development finance being an appealing one, it is important to note that achieving this type of funding can be complicated and subject to certain conditions. Traditional UK mortgage lenders may require developers to contribute a percentage of the project’s costs to demonstrate their commitment and help manage the associated risks. However, there are certain lenders and financial institutions that provide customised 100% development finance solutions, typically catering to more experienced developers with successful track records. Depending on your development history and financial situation, you may be able to access 100% development finance to get your project underway.

Key Criteria For 100% Development Finance UK

In order to access 100% development finance, you will need to meet the requirements set out by your lender. This can vary from lender to lender but generally you will need experience, a strong proposal, a comprehensive exit strategy, minimum loan amount, have a profitable scheme and more.

Developer Experience: UK lenders are more likely to provide 100% development finance to experienced developers as this reduces the risks associated with repayments.
Strong Exit Strategy: Having a clear exit strategy that demonstrates a repayment structure is key for gaining lender confidence.
Minimum Loan Amount: Some lenders will require a minimum development finance loan amount of around £1 million. It is worth checking this before submitting your application.
Good Proposal: A well-structured proposal that outlines your development plan, permissions, requirements, and strategies is another important criteria for showing the lender that you will use the loan wisely.
Collateral: While 100% development finance eliminates the need for a deposit, lenders may require additional collateral such as the property being developed or another asset to mitigate risks.

How Long Does It Take To Get 100% Development Finance?

The timeline for securing 100% development finance can vary based on a number of factors determined by the lender. Factors such as the complexity of the project, the strength of the proposal, internal processes and other requirements will all make a difference in terms of how quickly property developers can secure funding. The application process will typically involve submitting a detailed project plan and, if approved, the funding process can then begin. Some 100% development finance cases can take a few weeks whereas others might take several months. By speaking to an experienced broker, you should be able to streamline the process and increase your chances of a smoother and quicker approval.

How Is Development Finance Repaid?

Development finance is often repaid in stages based on how the project evolves. For example, different stages of the project including acquiring the land, getting planning permissions, completing construction, and then selling the property can all dictate the repayment structure. This will be discussed between the borrower and lender, so be sure to check your repayment terms upon receiving a development finance loan offer to ensure alignment with your project’s cash flow projections.