Development Finance in Lambeth

Development finance is a specialist form of property finance designed to fund construction, conversion, and heavy refurbishment projects. Unlike standard mortgages, development finance is drawn down in stages as construction progresses, with a Quantity Surveyor certifying completed works before each tranche is released. Facilities typically run for 6-36 months and are repaid through sale of the completed units or refinance onto a term mortgage.

Development finance facilities in Lambeth typically range from £300,000 to £8 million. Lenders will offer up to 70% of total project costs (Loan to Cost) and 65% of Gross Development Value (GDV). The exact amount depends on your experience, the project's viability, planning status, and proposed exit strategy. Larger schemes can be accommodated through syndicated facilities or a combination of senior and mezzanine debt.

Development finance rates in Lambeth currently start from 0.65% per month (7.8% per annum) for experienced developers with strong projects. Rates vary based on loan-to-cost ratio, developer track record, project complexity, and the lender's position in the capital stack. We access rates from over 100 lenders to ensure you receive the most competitive terms available for your specific project.

We arrange development finance for a wide range of projects across Lambeth including: ground-up new build residential, commercial-to-residential conversions under permitted development, house-to-flat conversions, heavy refurbishment schemes, mixed-use developments with commercial and residential elements, HMO conversions, and student accommodation. Each project is assessed individually on its merits.

Most development finance lenders require at least detailed planning permission or prior approval before they will release funds. Some lenders will consider projects at the pre-planning stage, though typically with higher rates and lower leverage. Projects proceeding under Permitted Development rights (such as office-to-residential conversions) generally require prior approval from Lambeth Council before finance can be arranged.

We provide indicative terms within 24 hours of receiving your project details. From formal application to completion typically takes 2-4 weeks, depending on the complexity of the deal, valuation, and legal process. For urgent cases, some lenders on our panel can complete in as little as 10 working days. Having your project information well-prepared (appraisal, planning documents, build costs, professional team details) helps expedite the process.

The capital stack describes the layers of funding used to finance a development project. Typically this includes: equity (your own cash contribution, usually 25-35% of costs), senior debt (the primary development finance loan, up to 70% LTC), and optionally mezzanine finance (a second charge loan that can take combined LTC up to 90%) or equity finance (an investor contributing capital in exchange for a share of profits). We help developers structure the optimal capital stack for each project.

Experience requirements vary by lender. Some lenders on our panel will consider first-time developers, particularly for straightforward projects like light refurbishments or permitted development conversions. For more complex schemes (new build, major conversions), most lenders prefer developers with at least one or two completed projects. Having a strong professional team — architect, quantity surveyor, contractor, and project manager — can compensate for limited personal experience.

Development finance is released in stages rather than as a single lump sum. The initial drawdown typically covers the site purchase (day one advance). Subsequent tranches are released against a Quantity Surveyor's certification of completed works — usually monthly. The QS visits the site, inspects progress, certifies the value of work completed, and the lender releases corresponding funds. This staged approach manages risk for both the lender and the developer.

Typical fees include: arrangement fee (1-2% of the total facility), valuation fee (£3,000-£10,000 depending on scheme size), monitoring surveyor/QS fees (£500-£1,500 per visit), lender's legal fees (typically £3,000-£8,000), and potentially an exit fee (0-1% charged on repayment). We provide a comprehensive cost breakdown before you commit to any facility, ensuring complete transparency. Our brokerage fee is typically 1% of the facility, payable on completion.