The development finance process

How to fund property development

Unsure how to finance your next development? Here’s how to navigate the development finance process in 20 easy steps



Find a site

Use your network, find an agent, go to an auction or search on a land searching tool like Nimbus Maps.


Think about finance

Run your numbers through Brickflow to check viability.


Do your due diligence

If the numbers don’t stack up, it’s a no-go. If they do, proceed to step 4.


Check the Gross Development Value (GDV)

Research on property portals & speak to agents.


Check your build costs

Look at external build cost data and ask a Quantity Surveyor (QS).


Check the planning

Check the conditions, if it’s outline or detailed and reserved matters.


Check the Residual Land Value

Residual Land Value = GDV - Costs (land, build & finance costs & professional fees) - Profit (c.20% of the GDV).


Visit the site

Visit the site in person to ensure there are no hidden surprises.


Make a bid

Based on the residual land valuation, make a realistic bid.


Keep detailed records

Record every cost & organise your files ready to share with your broker/lender, lender QS & Valuer.


Create your development appraisal

Once your site bid is accepted, use Brickflow to build your lender/investor presentation.


Source your finance

Shortlist up to 3 lenders on Brickflow or discuss with your lender or broker.


Apply for credit approval

Choose your preferred loan & submit your application.


Instruct professionals

Once your loan is credit-approved, the lender will appoint a valuer & QS.


Meet the valuer & receive the report

Share your vision, previous schemes & the comparables to help get the valuer on side.


Receive QS report

The QS checks your build costs & professional team & advises the lender if you will complete the project on time & to budget.


Lender reviews professional reports

Lender makes any changes to loan offer i.e. if the valuation is lower or build costs are forecasted to be higher.


Lender instructs lawyers

Lender’s lawyer provides a list of conditions to be met before completion.


Working towards completion

Lender’s lawyer reviews supplier contracts & requests collateral warranties. Several rounds of discussions between lawyers over several weeks.



Lender’s lawyer confirms all conditions have been met, completes report on title & requests funds from the lender.
Want to know more about how to finance property development?

Read our Easy Guide to Development Finance


Your Questions Answered

How do you fund first time property development?

There are numerous lenders that will consider lending to first time developers on the platform. Click ‘Check Eligibility’ on each loan option for further guidance. The lender will normally expect an experienced professional team around you. As a general rule, it is easier to borrow as a first-time developer against conversions and permitted development schemes than against ground-up developments, however we have funded new-build for first time developers. Speak to your Brickflow consultant to understand what your options might be.

Can you get 100% development finance?

Yes, but we don’t currently offer 100% loans via Brickflow. Normally, a lender will acquire the site themselves, take a development loan and then top up the shortfall to 100% with their own funds. The developer has no ownership rights and becomes a 3rd party contractor. If something goes wrong the lender/owner has full control.

At the end, all of the funding costs will be deducted and the lender will normally have a fixed priority return profit share. This means that they will always receive their profit share first. If the GDV falls during the project or if build costs have increased, this reduces the developer's profit share.

It will almost always be better to raise a small deposit yourself, from your own means or your network and then raise a senior and mezzanine development loan. We’ve had recent examples where we’ve got to 95% loan to cost, and all of the profit goes to the developer, meaning there’s less risk of the developer walking away with nothing.

In what stages is development finance released?

Development loans are normally split into 3 parts; lender interest and fees, build loan and land loan. The first part of the loan drawn is normally the land loan. This is typically known as the 'day 1 loan amount'. Depending on the other costs, sometimes there is no land loan, or sometimes a borrower does not need a land loan.

From the remaining loan, the lenders projected interest and fees for the whole loan are deducted. The remainder is the build loan. The build loan is released in pre-agreed stages based around the progress of the build. The lender will instruct their IMS to monitor each stage of work in terms of quality and against the agreed build schedule. Once the work has been signed-off, the next tranche of finance will be released to the borrower so they can pay their contractors

Poor workmanship or timing delays can lead to delayed stage payments. This can then have a detrimental knock-on effect on the rest of the project, so it’s to everyone’s advantage to ensure the build runs smoothly, and finance is released on time.

How do you calculate profit on GDV?

Profit on GDV is the profit generated from a project expressed as a percentage of the GDV.

It is calculated as follows;

  • (GDV - costs) / GDV
  • If the costs of a site were £800k and the sale price was £1m, then the profit is £ 200k
  • £ 200k / £ 1m is 20% profit on GDV
  • All costs need to be deducted; build costs, lender costs, build costs, purchase costs and sale costs.

The higher the potential margin, the lower the risk for a borrower. Profits can be eroded by increased costs and/or decreased GDV.

Lenders will look at this metric to ensure there is enough profitability in the project - the general rule is circa 20%, but lenders might accept lower percentages for more expensive areas such as London. Conversely, lenders may want a higher percentage than 20% for more regional projects.