Looking for the right development finance property solution in the UK? Whether you’re planning a new build, a major refurbishment, or a complex conversion, securing the right funding can make all the difference to your project’s success. Finding a financial partner who understands the nuances of property development is a big deal.
In this guide, we’ve explored the leading development finance providers and options for 2025. We’ll break down what makes each stand out, what they offer, and who they’re best suited for, helping you make an informed choice for your next venture.
Best Development Finance Property Options for 2025
The UK property market keeps moving, and so do the lenders supporting it. Here’s a look at some of the top development finance providers, including the invaluable support a specialist broker can offer.
1. CrowdProperty — Tailored Developer Funding
CrowdProperty offers specialised development finance solutions, designed by property experts for developers building quality projects. They focus on looking beyond just the numbers, considering the team, vision, and viability of each project. They fund a wide range of ventures, including new builds, heavy or light refurbishments, HMOs, airspace developments, and modern construction methods CrowdProperty.
Pros
- Deep understanding of the property development market.
- Streamlined application and funding process.
- Strong emphasis on project viability and developer experience.
Cons
- Specific loan terms and rates are not publicly advertised and require direct inquiry.
- May have specific criteria for project types and developer experience.
Best For: Experienced property developers seeking flexible and expert-backed funding for a variety of project types.
3. OakNorth Bank — Bespoke Solutions for Larger Projects
OakNorth Bank provides bespoke business loans for property development, known for its speed, flexibility, and strong grasp of the real estate sector. They offer financing from £1 million up to tens of millions, covering ground-up development, heavy refurbishment, and conversions with facilities tailored to the full project lifecycle. They often provide funding within weeks of application OakNorth Bank.
Pros
- Highly tailored financing solutions.
- Fast decision-making and funding process.
- Strong track record in supporting diverse real estate projects.
Cons
- High minimum loan amount (£1 million) may exclude smaller developers.
- Requires a detailed business case and project plan.
Best For: Medium to large-scale property developers and investors requiring significant capital and bespoke financial solutions.
4. Octopus Capital — Flexible Lending for Sustainable Builds
Octopus Capital offers a variety of real estate lending solutions, supporting projects from land acquisition through to development and refurbishment. They specialise in bridging, development, refurbishment, and buy-to-let finance. Notably, they offer a “Greener Homes Alliance” for discounted development finance on energy-efficient homes. Their use of discretionary capital allows for quick turnarounds and flexible terms Octopus Capital.
Pros
- Comprehensive lending across the property lifecycle.
- Focus on sustainability with the Greener Homes Alliance.
- Agile and flexible due to using discretionary capital.
Cons
- Specific pricing details are not readily available without direct contact.
- May have specific criteria for niche sectors and regional hotspots.
Best For: Developers and investors looking for flexible, fast finance, particularly those focused on sustainable building practices.
5. Shawbrook Bank — Specialist Finance for Professionals
Shawbrook Bank offers specialist property finance products, including development finance, geared towards professional landlords and investors. They pride themselves on speed, service, and certainty of funding, backing ground-up developments and refurbishments. Their blend of expertise and intuitive systems allows for quick decisions and funding, complemented by a dedicated broker site and insights hub Shawbrook Bank.
Pros
- Strong reputation and industry awards.
- Tailored solutions for professional property investors.
- Comprehensive support through their insights hub and broker services.
Cons
- Focus is primarily on professional landlords and developers, potentially less accessible for individuals.
- Detailed pricing is not publicly available.
Best For: Experienced property developers and portfolio landlords seeking reliable, specialist finance with a strong service offering.
6. Aldermore Bank — Supporting Small to Medium Developers
Aldermore Bank provides development finance for new builds, conversions, and refurbishments, with loans typically ranging between £500,000 and £10 million. They focus on understanding the project’s viability and the developer’s experience, providing a clear and transparent application process to support developers from initial planning through to completion Aldermore Bank.
Pros
- Competitive loan amounts for a broad range of projects.
- Emphasis on developer experience and project viability.
- Transparent application process.
Cons
- Specific interest rates and fees are not advertised.
- May have specific criteria for project scale and developer track record.
Best For: Small to medium-sized developers undertaking new builds, conversions, or significant refurbishments.
7. LendInvest — Residential Development Finance with a Digital Edge
LendInvest offers development finance specifically for residential property projects, providing flexible funding solutions primarily to experienced developers. They offer loans from £500,000 to £10 million for new builds and significant refurbishments, backed by a streamlined online application and management platform LendInvest.
Pros
- User-friendly online platform for applications and management.
- Focus on experienced developers can lead to smoother processes.
- Competitive loan amounts.
Cons
- Primarily for experienced developers, may be less accessible for newcomers.
- Specific pricing details require direct inquiry.
Best For: Experienced residential property developers seeking substantial funding for new builds or major refurbishments.
Understanding Development Finance Property Basics
Development finance is a specialised form of short to medium-term lending designed to fund the acquisition and construction costs of property development projects. It’s often misunderstood, but really, it’s the lifeblood of property growth in the UK.
What is Development Finance?
Simply put, development finance is capital borrowed to cover the expenses involved in building new properties, converting existing buildings, or undertaking major refurbishments. It typically covers costs like land acquisition, planning, construction materials, labour, and professional fees. The loan is usually repaid once the completed properties are sold or refinanced onto a longer-term commercial mortgage.
Why Development Finance Matters
Without it, most ambitious property projects simply wouldn’t get off the ground. It bridges the gap between a developer’s available capital and the substantial costs of bringing a project to fruition. It’s not just about the money; it’s about having a financial partner who understands the project lifecycle, from initial concept to final sale.
Key Components of Development Finance
- Acquisition Costs: The funds to purchase the land or existing property.
- Build Costs: The money needed for construction, contractors, materials, and associated professional services.
- Interest: Charged on the drawn down funds, often ‘rolled up’ into the loan.
- Fees: Arrangement fees, valuation fees, legal costs, etc.
- Exit Strategy: A clear plan for how the loan will be repaid, usually through sales of units or refinancing.
Types of Development Finance
The market isn’t a one-size-fits-all scenario. Here are the main types you’ll come across:
- Senior Debt: This is the primary loan, usually covering the largest portion of the costs, typically up to 60-70% of the gross development value (GDV) or 80-90% of the project’s costs. It carries the lowest risk for lenders, so it has the most competitive rates.
- Mezzanine Finance: This acts as a ‘top-up’ loan, filling the gap between senior debt and the developer’s equity. It’s riskier for the lender, so it comes with higher interest rates but allows developers to reduce their personal capital input.
- Bridging Loans: While not strictly development finance, bridging finance is often used in the early stages, for instance, to acquire land quickly before securing full development finance. They are short-term solutions for speedy transactions.
- Joint Venture (JV) Finance: This involves a partnership where a lender or investor provides a significant portion of the capital (sometimes 100% of costs) in exchange for a share of the project’s profits. This is common for less experienced developers or those looking to minimise personal exposure.
Key Factors to Consider When Choosing Development Finance
Picking the right finance isn’t just about the lowest interest rate. It’s about finding a solution that supports your project and your business goals. Here’s what to think about:
- Developer Experience: Lenders often look at your track record. If you’re a newer developer, you might need a lender or broker who can support your entry into the market.
- Project Type and Scale: Is it a residential new build, a commercial conversion, or a smaller refurbishment? The type of project will dictate which lenders are interested and what terms they offer.
- Loan-to-Cost (LTC) and Loan-to-Value (LTV): These metrics are central. LTC typically measures the loan against the total project costs, while LTV measures it against the Gross Development Value (GDV) once complete. Understanding these helps you gauge how much equity you’ll need to contribute.
- Interest Rates and Fees: Always look at the total cost of borrowing, not just the headline interest rate. Factor in arrangement fees, exit fees, valuation costs, and legal fees.
- Flexibility and Speed: Some projects require quick decisions or the ability to adapt to unforeseen circumstances. A lender or broker known for flexibility and speed can be invaluable.
- Lender’s Expertise: Does the lender (or your broker) truly understand your sector? A specialist in, say, brownfield development will be more effective than a generalist.
Market Trends in UK Property Development Finance (2025)
The landscape of UK property finance is constantly evolving. Here are some trends shaping development finance in 2025:
- Sustainability Focus: There’s a growing push for greener developments. Lenders like Octopus Capital are offering incentives like their “Greener Homes Alliance” for energy-efficient properties. Developers who integrate sustainable practices may find more favourable terms Octopus Capital.
- Technological Advancement: Digital platforms are streamlining applications and management. LendInvest, for instance, highlights its user-friendly online platform, making the process quicker and more transparent LendInvest.
- Bespoke Solutions: As projects become more complex, lenders are increasingly offering tailored finance packages. ‘Off-the-shelf’ solutions are becoming less common, replaced by finance structured around specific project needs and developer profiles.
- Importance of Brokers: With a wider array of specialist lenders and more nuanced criteria, the role of an experienced commercial finance broker is more crucial than ever. They can navigate this complexity to find the best fit.
- Increased Scrutiny: Lenders are being more rigorous in their due diligence, especially concerning project viability and the developer’s experience, requiring robust business cases and realistic forecasts.
How a Property Finance Broker Helps You Secure Development Finance
Navigating the world of property development finance can feel like trying to solve a complex puzzle. There are so many lenders, each with their own set of rules, risk appetites, and product offerings. This is where a specialist commercial finance broker like Property Funding and commercial finance in the UK truly makes a difference.
Instead of you spending countless hours researching individual lenders, submitting multiple applications, and potentially facing rejections, a broker acts as your single point of contact. We take the time to understand your project in detail, evaluate your financial position, and then present your case to the most appropriate lenders on our panel. This isn’t just about finding *any* loan; it’s about finding the *best* loan for you.
We can often access exclusive deals or specialist lenders that aren’t available directly to the public. Furthermore, we help you package your application in a way that appeals to lenders, highlighting strengths and mitigating perceived weaknesses. Our expertise means we can advise on structuring the deal, negotiating terms, and even helping with your property development finance basics, ultimately saving you time, stress, and often, money.
Which Development Finance Property Option Is Actually the Best?
When it comes to securing development finance, the “best” option isn’t a single lender but rather the most suitable funding solution for your specific project. While direct lenders like CrowdProperty, OakNorth Bank, and Aldermore Bank offer excellent products, their criteria and specialisms can be quite narrow. This is precisely why engaging with a professional broker like Property Funding and commercial finance in the UK comes out on top.
We don’t have a single product to push; our goal is to find the perfect match from the entire market. This means we can often secure more flexible terms, better rates, and higher loan-to-cost ratios than you might achieve by going direct to a single lender. We manage the process, allowing you to concentrate on the build. Given the complexity and significant capital involved in property development, having an expert by your side is invaluable.
Try Property Funding and commercial finance in the UK:https://property-funding.co.uk/
FAQ — Development Finance Property
1. What is development finance property?
Development finance property refers to specialist loans secured against land or property to fund its acquisition and subsequent construction, conversion, or major refurbishment, typically repaid through the sale or refinancing of the finished units.
2. How much can I borrow for property development?
The amount you can borrow depends on several factors, including your project’s Gross Development Value (GDV), total projected costs, your experience as a developer, and the lender’s loan-to-cost (LTC) and loan-to-value (LTV) criteria. Loans can range from hundreds of thousands to tens of millions, often covering up to 85% of costs.
3. Is development finance only for new builds?
No, development finance supports a wide range of projects beyond just new builds. This includes significant refurbishments, conversions of commercial buildings to residential, extensions, and even smaller projects like heavy renovations or HMO conversions.
4. What are the typical interest rates for development finance?
Interest rates for development finance are generally higher than standard residential mortgages due to the increased risk involved. Rates typically range from around 0.6% to 1.5% per month, but this varies significantly based on the lender, project risk, and developer experience. An estimated 11% interest rate was used for illustrative purposes by CrowdProperty, for example CrowdProperty.
5. Can I get development finance with no experience?
It’s harder to secure development finance with no experience, but not impossible. Lenders may require a higher equity contribution or a more robust business plan, and some might prefer a joint venture structure. A good broker can connect you with specialist lenders who are more open to working with newer developers.
6. What’s the difference between senior debt and mezzanine finance?
Senior debt is the primary, lower-risk loan covering the bulk of the project costs, while mezzanine finance is a higher-risk, higher-interest loan that tops up the funding gap between senior debt and the developer’s equity contribution.
7. How long does it take to get property development finance?
The timeline varies significantly. While some lenders, like OakNorth Bank, can offer funding within weeks OakNorth Bank, complex projects or those requiring specific structuring can take several months. Using an experienced broker can help speed up the process.
8. What is an exit strategy in development finance?
An exit strategy is your plan for repaying the development loan. This is usually through the sale of the completed units (for residential developments) or by refinancing the completed commercial property onto a long-term commercial mortgage.
9. Why should I use a broker for development finance?
A broker offers access to a broad panel of lenders, including specialist ones, saving you time and effort. They negotiate on your behalf to secure the best terms and help structure your application, significantly increasing your chances of success and often securing better rates and conditions than if you went direct.
10. Are there options for sustainable development finance?
Yes, increasingly so. Lenders like Octopus Capital offer schemes such as their “Greener Homes Alliance,” providing discounted finance for properties that meet certain energy efficiency standards. This trend is likely to grow in 2025 and beyond Octopus Capital.