.png){kind=logo}
The success of a development project can depend on having the right funding available at the right stages.
Jayhawk Capital advises on development finance for ground-up construction, property conversions, major refurbishment projects and other schemes where funding needs to reflect the full development programme.
We consider the site, planning position, purchase price, development costs, experience, professional team, projected value and intended exit. This allows us to assess how the project may be funded and provide an early, honest view of what appears achievable.
For property developers, investors, landlords, landowners and property businesses.
Development finance is designed for projects where value will be created through construction, conversion or substantial building work.
Unlike a standard mortgage, the funding can be structured around both the acquisition of the property or land and the costs of completing the development. Funds for the works are normally released in agreed stages as the project progresses.
Development finance may be appropriate where:
The right structure will depend on more than the property value alone. The total project cost, available contribution, development experience, projected value, timetable and repayment strategy all need to be considered together.
Development finance may be used to acquire land and fund the construction of houses, flats or other residential units.
The lender will need to understand the planning position, build programme, cost plan, professional team, anticipated demand and value of the completed scheme.
Funding may be available for the conversion of an existing building into a different use or configuration.
This could include converting commercial premises into residential accommodation, dividing a larger property into several units or changing the layout and use of an existing asset.
The planning position, building regulations, proposed works and expected value after completion will all influence the available options.
Where a property requires substantial structural work, extension, reconfiguration or redevelopment, development finance may be more appropriate than a standard refurbishment bridge.
The distinction will usually depend on the scale and complexity of the works, the amount being spent and how the funding needs to be released.
Development finance can also be considered for commercial and mixed-use projects, including schemes combining residential and commercial units.
The lender’s assessment may take account of the intended occupants, expected rental or sales demand, commercial viability and the proposed exit for each part of the development.
A facility may be structured to support both the initial site purchase and the subsequent development costs.
Where planning or other important conditions are not yet in place, it may be necessary to consider whether bridging finance should be used for the acquisition before moving onto development finance.
A developer may need to refinance a project that is already underway because an existing facility is approaching its end date, costs have changed or the original structure no longer fits the project.
A new lender will need a clear account of the work completed, funds spent, remaining costs, current value, revised programme and route to completion.
A development finance facility is usually arranged around the different stages of the project rather than advanced as one unrestricted lump sum.
The initial advance may be used to help purchase the site or refinance existing borrowing secured against it.
The amount available at this stage will depend on the site value, purchase price, planning position, existing debt and overall development proposal.
The remaining facility is intended to contribute towards eligible construction and development costs.
Rather than receiving all of the build funding at the beginning, the developer will normally request funds in stages as work progresses.
Drawdowns may be linked to agreed stages within the build programme.
Before releasing further funds, the lender may require an inspection from its monitoring surveyor to confirm the progress made, expenditure to date and remaining cost to complete the project.
A lender will normally expect the developer to contribute cash, equity or value to the transaction.
The amount and timing of that contribution will depend on the lender, the project and how the facility is structured.
Interest may be added to the facility, retained at the beginning or paid during the term, depending on the arrangement.
The way interest and fees are treated can affect both the amount available for the project and the developer’s ongoing cash-flow requirement.
The structure should therefore be assessed using the full facility rather than the headline interest rate alone.
Development finance needs to be considered as a complete project. A strong site or attractive completed value will not necessarily be enough if the costs, programme or exit do not support the proposed structure.
We consider the property or land, its current use and value, the purchase terms and the status of any planning permission.
Where conditions remain outstanding, we will need to understand what they are, how they affect the build and when they are expected to be discharged.
The lender will need a clear explanation of what is being built, converted or refurbished.
This can include the number and type of units, proposed specification, construction method and the market the completed development is intended to serve.
We review the estimated development costs, proposed construction timetable and the level of contingency included within the figures.
The cost plan should account for the work required to complete the project and any relevant professional, statutory and associated development expenses.
Development experience can influence which lenders and structures are available.
The lender may also assess the experience of the contractor, architect, project manager, quantity surveyor and other professionals involved in delivering the scheme.
Where the borrower has limited direct development experience, relevant construction, trade, property or project-management experience may still form part of the wider assessment.
The project may be undertaken by an individual, partnership, trading business or special-purpose company.
The lender will need to understand who owns the site, who is borrowing, how the developer’s contribution is being provided and whether any other parties have an interest in the transaction.
The gross development value, often referred to as the GDV, is the estimated market value of the completed scheme.
This is considered alongside the total development cost, anticipated profit, market demand and evidence supporting the expected sale prices or rental values.
We assess the amount required for the purchase or refinance, the build-cost facility, the available contribution and any existing borrowing.
It is also important to understand when funds will be needed and whether the proposed drawdown structure reflects the actual construction programme.
The facility must have a credible route to repayment.
This may involve selling the completed units, refinancing the finished development onto longer-term investment finance or using a combination of sales and retained units.
The proposed exit should be considered at the beginning rather than after the project is complete.
We consider the expected start date, construction period, sales or refinancing period and any deadline affecting the site or existing borrowing.
The term must provide enough time not only to complete the works, but also to implement the intended exit.
Securing the development facility is only the beginning. The finance must continue to work as the project moves through construction.
A monitoring surveyor may be appointed by the lender to review the initial cost plan, visit the site and report on progress before staged funds are released.
Delays, design changes and unexpected costs can occur during a development. Where circumstances change, it is important to understand how they affect the remaining facility, developer contribution, programme and exit.
Jayhawk Capital remains involved as the application and drawdowns progress, helping to keep the required information moving and making sure you understand what is being worked on, what is awaited and what needs to happen next.
Development opportunities can come with fixed purchase dates, expiring facilities or construction programmes that cannot afford unnecessary delay.
Moving promptly starts with establishing whether the project appears workable and identifying the information a lender will need to assess it.
Jayhawk Capital was built around speed and accuracy of service. We take the time to understand the site, numbers, people and intended exit before presenting a requirement.
This helps identify potential issues early, which could include:
Where the proposed structure does not appear realistic, we believe it is better to explain that at the beginning. Where there is a viable route to explore, careful preparation can reduce avoidable questions and delays later.
Throughout the transaction, we keep you informed about where matters stand, what is currently being worked on and whether anything is required from you.
The development facility is one part of a wider transaction.
A project may begin with a bridging loan to acquire the site, move onto development finance once the necessary conditions are in place and finish with sales or longer-term mortgage finance.
Experience across bridging, development, buy-to-let, commercial and high-value property finance allows Jayhawk Capital to consider the stages before and after the development facility, rather than treating it as an isolated product.
This can be particularly important where:
The aim is to arrange finance around the project and the developer’s individual circumstances, while considering how the immediate transaction fits with their wider property plans.
Jayhawk Capital seeks to become a reliable point of contact beyond one project, supporting future acquisitions, developments, refinancing requirements and portfolio decisions with the same direct advice and consistent communication.
The overall cost of development finance will depend on the project, lender, level of risk, facility size, term and funding structure.
Potential costs may include:
Interest may be retained within the facility, added to the balance or serviced during the term. The timing of drawdowns can also affect the total interest charged because build funds are normally released over the course of the development rather than all being advanced at the outset.
We will explain the anticipated costs, the proposed facility structure, the amount available at each stage and how the fees and interest affect the project before you decide whether to proceed.
Jayhawk Capital may charge a tailored broker fee of up to 1% of the loan, subject to a minimum fee of £500. For development finance, the fee is generally payable on completion.
Development finance is a form of property funding used for construction, conversion and substantial refurbishment projects.
A facility may contribute towards the acquisition or refinance of the site and the costs of carrying out the development. Build funds are normally released in stages as the work progresses.
Bridging finance is generally used as short-term funding for a property purchase, refinance or lighter refurbishment where most or all of the loan is advanced near the beginning.
Development finance is structured around a construction project, with funding for the works normally released through staged drawdowns.
The scale and nature of the work, cost of the project and way the funds need to be released will help determine which route is more appropriate.
Potentially. A development finance facility may include an initial advance towards the purchase or refinance of the site and a separate facility for eligible development costs.
The amount available will depend on the site, planning position, total costs, developer contribution, completed value, experience and exit strategy.
Build funds are normally released in stages as the project progresses.
The lender may appoint a monitoring surveyor to inspect the site, assess work completed and confirm the remaining cost to complete before approving each drawdown.
Potentially. Some lenders will consider first-time developers, but the project and wider team will need to provide sufficient confidence that the scheme can be delivered.
Relevant trade, construction, property or project-management experience may be considered alongside the experience of the contractor and professional team.
A first project may need to be structured differently from an application made by a developer with a completed track record.
The planning position will have a significant influence on the finance available.
Full planning permission is commonly required before funds for construction can be drawn. However, the site may sometimes be acquired before planning is secured, potentially using a different form of finance.
We will need to understand the planning status, outstanding conditions and proposed timescale before identifying the routes worth exploring.
The amount available will depend on factors including:
We will need to review the project figures before giving an indication of the funding that may be available.
Development finance is commonly repaid through the sale of the completed scheme or by refinancing the finished property onto longer-term borrowing.
Some developers may sell part of a scheme and retain other units. Where this is intended, the repayment structure and release of individual properties from the lender’s security will need to be considered from the start.
Some development finance arrangements are unregulated, while others may fall within a regulated framework depending on the borrower, purpose of the finance and intended occupation of the property.
The regulatory position should be established from the circumstances of the transaction rather than assumed from the name of the product.
We will explain the position that applies before you proceed.
It is helpful to know:
You do not need to have every report or supporting document ready for the first conversation.
Great customer experience! John was brilliant start to finish and really supported us throughout the whole process. Bridging loans were all new to us so John really took the time to make sure the loan was right for us, along with explaining everything in detail. We had a short timescale and John again made sure this was pushed along at each point in the process
Adviser: John Symons
You may already have a site under offer, a project moving through planning or an existing development that requires a new funding structure.
Tell us about the site, the proposed works, the amount required, the development costs and how you expect the finance to be repaid.
We will review the initial details and contact you to discuss whether there appears to be a realistic route forward and what information is needed next.
Security will be required. Your property may be repossessed if you do not keep up repayments on finance secured against it.
Not all forms of development finance are regulated by the Financial Conduct Authority.
Development finance often sits alongside other property or mortgage requirements. Explore related services offered by Jayhawk Capital.
