Funding for First Time Developers

A question we are often asked is whether it is possible to obtain funding for first time developers?  The simple answer is yes but, of course, there are a number of factors that need to be taken into consideration.  The property market, despite all the current challenges, is still strong and can, therefore, provide lucrative profits for property developers.   Nevertheless, success is not a given and requires careful planning and a prudent approach to each opportunity.

Types of Development Funding

Bridge lenders will need less evidence of the developers experience and may be prepared to lend up to 75% gross loan to value (LTGDV) and this can be great for light refurbishments.  Where shortage of equity is an issue, then Joint Venture Funding may be an option but the lender will want to see strong construction experience.  There are also a number of senior debt funders whom will be comfortable with providing funding for first time developers with, of course, the right level of security.

Where to start? Know your numbers

A lender will want to see that the developer has looked in detail at all the potential costs and allowed enough to cover each element. All details should be considered and as well as the key expenses such as the land cost and build cost; other items will include build warranty, building control fees, marketing costs, CIL/Section 106 fees, and so on.  This process will help prevent any underestimating of costs.

At the outset of a loan application the lender will simply wish to see a one page appraisal of these costs.  A detailed cash flow will not needed until later in the process.  From this appraisal the lender will not only see the detail that the developer has gone into but will understand build costs per square foot, net profit and contingency. Developer Money Market can help by providing a suitable appraisal template to get the developer started.

Knowing the numbers also means having a realistic expectation of the gross development value (GDV). Initially local estate agents will usually be pleased to provide their expertise and experience to predict sale values.  This type of information, together with your own comparable sales evidence, will need to be shown to the potential lender.

“the lender will not only see the detail that the developer has gone into but will understand build costs per square foot, net profit and contingency. Developer Money Market can help by providing a suitable appraisal template to get the developer started.”

Funding for First Time Developers – Know the Exit Route

Property developers are creative and positive thinking people, but it is important to be realistic about timescales.  Developers need to ensure that they have allowed the appropriate amount of time for the build, consider any potential delays and then the time needed for the exit route.  Off plan sales are always possible but income will not be received until practical completion and conveyancing may take months where a buyer’s chain is involved.

Comfortable Lending Criteria

At the current time, with Covid-19 still affecting the property market, lenders are taking a cautious approach to their loan criteria. This means that to raise funding for first time developers, the loan to value (LTV) will need to be comfortable for the lender.  However, this LTV can be also supported through providing alternative security.  Where the potential borrower has other property assets these may be taken as security by the lender.  Obviously, such security will have to also have sufficient net equity available.

Play to your strengths

Many first time developers will already have experience of the property industry and come from a professional background as a contractor, quantity surveyor, architect, project manager, site manager or similar.  A lender will want to know the ability of the developer to manage a successful project and so demonstrating skills, experience and track record will be very important.
In this regard, it would be worth considering starting with an achievable project that falls within your experience levels.  An experienced builder or contractor will probably have a strong and wide-ranging skill set, but for other new developers then this may be less broad. Large multi-unit developments, refurbishment of an historic building and air-space developments and similar, may be seen as ambitious for a first time developer in the eyes of the lender.


Some first time developers will take the opportunity to team up with a business partner to get their first project achieved.  These partnerships may be a combination of one partner that can provide equity and a partner that can bring building experience.  This can be an idea means of creating mutually beneficial business arrangement and a good way to achieve funding for first time developers.
As an alternative, having a fixed price design and build contract from an experienced contractor may also be sufficient to reassure a lender. This, together with a good project manager, can be enough to persuade a lender that the construction will be well managed.

How to Approach Lenders

Developer Money Market are an independent specialist in property development finance and will be able to consider a market wide approach finding the right lender.  We have excellent contacts with a large range of specialist property development lenders.  We provide the highest levels of customer service to guide developers through the loan application process. Our experienced team understand what lenders need and want to understand.

Ensuring that the deal is properly packaged is crucial to getting the interest of a specialist lender and finding funding for a first time developers.  We will not just structure the potential finance requirement but also ensure that we sell the whole project. We will understand the quality of the project, its USP’s, location, potential demand and, the developer’s skill strengths.  So get searching Rightmove and we’ll look forward to hearing from you!

Those seeking funding for first time developers can search online here to compare potential loans or speak to one of our team on 0207 096 2003.


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