Development Finance Explained: Funding Your Next Property Project
Development Finance · December 2024 · 10 min read
A comprehensive guide to development finance in the UK, covering everything from land acquisition to phased drawdowns and exit strategies.
Development finance is specialist short-term funding designed to cover the costs of property development projects—from ground-up new builds to major refurbishment schemes. Unlike traditional mortgages, development finance is released in stages as construction progresses, with the loan repaid upon project completion through sale or refinancing.
Development loans are structured as phased drawdowns rather than a single upfront sum:
1. Initial drawdown - Covers land purchase and initial costs 2. Construction drawdowns - Released as building stages complete 3. Final drawdown - Covers finishing works and contingency
This approach protects both lender and borrower, ensuring funds align with project progress verified by independent monitoring surveyors.
In this article
- What is Development Finance?
- How Development Finance Works
- The Phased Drawdown Structure
- Typical Loan Parameters
- Types of Development Projects We Finance
- New Build Residential
- Commercial Development
- Permitted Development Conversions
- Key Success Factors
- 1. Robust Project Appraisal
- 2. Experienced Professional Team
- 3. Developer Track Record
- Financing First-Time Developers
- Our Development Finance Process
- Ready to Fund Your Development?
Offices
Registered and North of England office: Ayrshire Lodge, Brass Castle Lane, Nunthorpe, Middlesbrough, TS8 9EB.
London office: 167-169 Great Portland Street, 5th Floor, London, W1W 5PF.
Telephone +44 7746 212528. Email som@unicorn-commercial.co.uk
Unicorn Capital Advisory is a trading name of Unicorn Capital Advisory LLP (LLP No. OC459692). Finance is arranged for business purposes only and is not regulated by the Financial Conduct Authority.
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