Development Finance for a First-Time Developer Building a Luxury Home

Deal Structure

55% Loan to Gross Development Value

Positive Commercial Finance regularly helps clients secure Development Finance for projects that fall outside standard lending criteria. In this case, we arranged funding for a team of experienced construction professionals who were undertaking their first residential development together.

Although the project was new to them as developers, their combined experience gave lenders confidence that the scheme could be delivered successfully.

The Opportunity

The clients had purchased the site several years earlier and later secured planning permission to demolish the existing property and construct a new luxury home of more than 3,000 square feet.

Once complete, the property was expected to have a Gross Development Value (GDV) of approximately £900,000.

While each member of the team had extensive experience in their own specialist field, they had never worked together on a development they owned themselves.

That created an unusual funding scenario.

The lender needed confidence not only in the project itself, but also in the team’s ability to manage the development collectively.

How We Structured the Finance

Positive Commercial Finance focused on the strengths of the application rather than the lack of previous joint development experience.

We presented the team’s combined expertise, the quality of the proposed scheme and the relatively modest borrowing requirement compared with the projected end value.

Because the required Loan to GDV was conservative, we were able to approach specialist development finance lenders with confidence.

The result was a competitive funding package that covered the entire construction budget and associated professional fees.

Even better, the lender agreed to limit the Personal Guarantees to potential cost overruns and any interest shortfall, reducing the clients’ overall exposure.

Deal Structure

• Build Costs: 100% funded
• Professional Fees: 100% funded
• Interest Rate: 6.75% per annum
• Arrangement Fee: 2%
• Exit Fee: None
• Personal Guarantees: Limited to cost overruns and interest shortfall

The Result

The clients secured a flexible Development Finance facility that allowed them to transform an owned plot into a high-value residential development without needing to fund the construction costs themselves.

More importantly, the funding recognised the value of their combined professional experience rather than simply focusing on the fact that it was their first development as a team.

This case study shows how specialist Development Finance can support experienced professionals taking the next step into property development, even where there is no previous track record as a joint venture.