I have been arranging property development finance for clients for over 10 years. I have worked on
small refurbs and PD schemes through to ground up new build sites of over 20 units. I am often
asked ‘who is your go to lender?’ or ‘which lender is the best to work with for property development
One thing I have learned is that the best development finance lender is not necessarily the cheapest
option. As a developer there are more considerations other than rate that you should be
When I recommend a development lender to clients the most important factors are, relationship,
corporate structure, funding source and flexibility.
DEVELOPMENT FINANCE LENDER CRITERIA
- Relationship – Having a good relationship with the individuals at the lender is so important. If
I have a good relationship with the funder, then it means I trust that person, have met that
person and have completed several deals with that person. This means that I can help to
control the situation when a valuation comes in lower or when we need an urgent
- Corporate Structure – I want a funder who can make a decision within 48 hours. I don’t want
my client to be waiting for a decision to take a week or two weeks due to corporate
structures that need sign off from multiple managers or underwriters. This is why small
teams or case managers with mandates to make decisions are so important.
- Funding Source – How your development finance lender is funded is very important. Are
they well-funded, if so who by, do they have their own funds, do they have to crowd source
at point of draw down? Ove the years I have worked with banks, family offices and crowd
platforms. The best lenders have their own funds ready to lend. Unfortunately, I have found
that whilst crowd funding is a good model it is subject to achieving the funding from
individuals on a platform which is time consuming and uncertain.
- Flexibility – The final criteria for a good development finance lender is flexibility. I want
flexibility or a ‘can do’ attitude from a lender and their solicitors. I want a lender to want to
find a way to make the deal work rather than on that puts up barriers.
A lender that can be flexible in their lending will build a relationship which will last more
than one development. Scenarios where flexibility is key include:
- Extension of the facility term (rather than charging the default rate)
- Willingness to use indemnity insurances or to ‘take a view’ to overcome small snags
with planning or legals.
- Speed – the ability to work faster when urgency is needed.
- An option to bend loan to value limits due to slight down valuations because the
scheme still works.
All these factors are important considerations when deciding on the best development finance
lender for any given situation.
I also need to pay attention to hard facts such as, loan amount, location, development type,
developers experience and net assets amongst other factors.
Development finance is more than just rate. Getting a blend of all the aforementioned factors as
well as rate is important and that the role I play. I work with developers to secure funding with
trusted funders that I have relationships with and that I would use to fund my schemes.
To discuss property development finance for everything from refurbs to ground up new build
schemes do get in touch.
You can reach me on email: Wesley@foxdavidson.co.uk