Property Development Finance

Introduction

Development finance is used to fund property projects from start to finish.  It’s more than just borrowing – it’s about backing a plan.

From ground-up builds to major conversions, funding is released in stages as the project progresses.

Get the structure right early, and everything else moves faster.

Compare development finance below.

How it works

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What people are saying

Quick!

The whole process quick and straight forward

Gurdev

Customer service excellence

March 3rd, 2026

Friendly, timely and very professional service. Regular progress updates particularly appreciated. A very customer friendly/focused service.

David

Highly recommended

February 26th, 2026

We had quite complicated requirements for bridging refinance and ambitious timescales. Propp were the only company we could find who could help us. Peter was very helpful and reassuring on our initial call, and remained attentive and responsive throughout the process (even when I must have been giving him a constant headache!) Although we didn't meet the original deadline, Peter was very helpful in communicating with us, our existing lender and our surveyor, and got it all through in the end, when sometimes it seemed unachievable.

Lee

Attention to detail.

February 25th, 2026

Megan and Jake have worked hard to help process quite a complicated refinance and taken us through to offers with skill and attention to detail.

JY

All at Propp are amazing...

February 25th, 2026

From Ellie to Caroline to Keira to Zahid and Eddie. Amazing. Thank you!

Natasha

Excellent service from start to finish!

February 24th, 2026

My experience with Propp has been first class! I was having issues with obtaining a mortgage through a high street lender, and after Propp took over, I was able to secure a bespoke mortgage. Communication throughout the process was excellent. Lauren and Sophie kept me constantly informed, and chased the mortgage lender when necessary. I would definitely recommend if you too are having difficulties securing a mortgage deal.

Steve

Great advice...

February 23rd, 2026

Great advice and support from Matt and Jordan with quick and efficient service. Cannot recommend highly enough.

Margaret

Great company.

February 20th, 2026

Helped me with a few amazing deals and really smooth process all round. Highly recommend and just to mention, Abbie and Molly, both stars 🌟.

German

Excellent staff!

February 14th, 2026

Excellent staff with so much knowledge.

Lorraine

I can’t fault this service!

February 12th, 2026

I can’t fault the efficiency, communication and service of Propp. Everyone I have dealt with has been very quick to respond and have offered solutions when necessary. I would certainly use them again and wouldn’t hesitate to recommend.

Joanne

Very honest and helpful

February 10th, 2026

Very honest and helpful and did place my case immediately within 24 hours

Franco

It has been a pleasure to work with this company.

February 2nd, 2026

Both Abbie Ball and Sophie Colmer dealt with me in a professional and speedy manner. I first contacted this company on 17th January and have received a mortgage offer today 2 February. I am thrilled

Lesley

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Modern office building

What is development finance?

Property development finance is designed to provide developers with the capital needed to construct a new building or convert an existing building. It is the most suitable type of property finance to fund a residential development, commercial premises, or industrial building.

Who can get development finance?

We are able to source a development loan regardless of whether you are an experienced developer or first-time builder, however the level of experience you have usually dictates the rate available to you.

How much can I borrow with a development loan?

The maximum you are able to borrow against the development is 70% of the of the purchase price depending on whether the project is a ground-up development or light refurbishment so you will need some capital in advance.

In addition to the development loan you require to fund the purchase, you can borrow up to 100% of the build cost. You will need to make sure the total loan does not exceed 70% of Gross Development Value (GDV).

Maximum development loan varies from lender to lender, so the benefit of using an intermediary like Propp is having access to a wide range of products. Our lenders offer loans from £250,000 to £50 million.

Man looking across office, intently focused.

What is a usual development finance loan term?

The maximum period you can hold development finance is usually 36 months. Your exit strategy will usually be sale of the development or refinance.

How does a development loan work?

Unlike getting a standard mortgage to build a house, development finance lenders release a percentage of the funds at the beginning of the build to get the project underway. The remainder of the money is released in draw-downs as the project continues.

Interest is only charged on the funds that get released, so dependent on how the project progresses the overall costs of the facility could be much lower.

Another way in which property development finance is a good option is if you’re looking to borrow to fund a project that would be rejected by mainstream lenders, such as derelict or rundown properties.

How much does development finance cost?

The cost of development finance varies from lender to lender and your experience as a developer will impact the rate you have access to. Fees, charges and general costs are usually made up of;

  • Cost of Interest – Charged on either a monthly or annual basis.

  • Arrangement fee – Usually between 1% and 2% of the gross facility

  • Exit fee – The fee payable to close the facility. Usually 1%-2% of the total cost of the loan

  • Broker fee – There is usually a fee payable to the broker for searching for and arranging the development loan

Is development finance easy to get?

Providing you have development experience the main considerations from the lenders point of view are the assets you are able to offer as security and the feasibility of the project in terms of profitability. You’ll need planning permission and a statement of works before you start looking for a development loan.

Scaffolding on the outside of a building under development

What can you use development finance for?

Development finance can be used to fund the ground-up development, conversion or refurbishment of a residential development, commercial premises or industrial building.

Can you get development finance for first time developers?

As an investor you may have stumbled across an attractive development opportunity but as someone with zero experience managing a similar project you may wonder how to get the ball rolling, or if it was even feasible.

The good news is, its not impossible. There are lenders open to lending to inexperienced developers on the basis that you have a strong team of experienced contractors, architects, quantity surveyors and project managers that have a proven track record of managing similar projects.

The second element lenders will assess is the viability of the project. Will it be profitable? Does it have planning permission? Are your timelines and budgets realistic?

This may sound daunting, but our development finance experts will support you to assess your proposal and stress test it before presenting it to lenders.

What details do lenders need to assess the viability of a project?

  • Purchase details of the land or building

  • Breakdown of the construction costs

  • Breakdown of additional costs including marketing, finance, insurances, surveys and professional fees etc

  • Details of planning permission

  • Exit strategy. How will the development finance be repaid? Sale of property or refinance?

Unable to get development finance for first time developers? Consider a joint venture.

If your proposal has been rejected or you were unable to find the capital you needed to support the loan, one option is a joint venture with a more experienced developer: you pool your resources to access their know-how and secure the funding you need. This means you can benefit from their experience to get your first project under your belt as well as being able to pool your resources to put up the amount needed.

Think about who you are developing for

Are you looking to build £1m properties at the top end of the market or are you targeting the more accessible mid-range? Lenders prefer mid-range values that are relevant and accessible to your local market as they are more likely to sell quickly.