Lendus.

New Build Residential Development Finance

Development finance for speculative residential schemes — from small clusters of houses to large apartment blocks — built for open-market sale by professional developers.

200+ UK lenders
2-minute application
No credit check to apply
FCA-regulated brokers

Rates

6.5% – 10.0%

per annum

LTGDV

Up to 65%

LTC

Up to 85%

Timeline

12-24 months

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Finance structure

Senior Development Loan

Rate
6.5% - 9.5%
LTC
Up to 70%

Best for: Established housebuilders with a strong track record, full planning consent and a credible sales programme

Stretched Senior

Rate
8.5% - 10.0%
LTC
Up to 85%

Best for: Mid-market developers seeking higher leverage from a single lender rather than a senior/mezzanine split

Mezzanine

Rate
13% - 18%
LTC
Up to 92%

Best for: Developers with limited equity seeking maximum leverage on schemes with strong pre-sales or off-plan reservation agreements

Key considerations

Exit strategies

Phased open-market sales with proceeds reducing the loan balance
Block sale to housing association or PRS investor
Development exit refinance to extend the sales programme

Eligibility

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Market context

New build residential development accounts for the majority of specialist development lending in the UK, with annual completions of around 200,000–230,000 new homes (excluding affordable and housing association delivery). The average new build house in England now exceeds £330,000 at sale, supporting strong developer margins in most regions outside prime London. Lender appetite for residential schemes in commuter belt, regional city and urban regeneration locations remains high in 2026, with senior lending margins having tightened from their 2023 peaks as competition between lenders increased. Planning reform announcements in 2024–25 are expected to accelerate the consented pipeline over the medium term.

Frequently asked questions

How many units does a development need to be to access institutional development finance?
Most specialist development lenders will consider schemes from as few as 2–3 units up to several hundred. Smaller schemes (under 5 units) are often better served by bridging lenders using a development exit structure or light development products. Schemes of 20+ units typically attract the most competitive senior debt terms, and institutional lenders often have minimum loan sizes of £1–2 million.
Do I need pre-sales before I can draw my development loan?
Not always — many lenders will proceed without pre-sales, particularly in strong housing markets with established comparable evidence. However, off-plan reservations or exchange contracts can significantly improve your loan terms, reducing the rate margin by 0.5–1.5% in some cases. For larger schemes above 50 units or in weaker markets, lenders may make pre-sales a condition of the initial drawdown.
How does the monitoring surveyor process work?
On drawdown of each stage of the facility, the lender's independently appointed monitoring surveyor (MS) inspects the site, confirms works are complete to the required standard, and issues a certificate approving the advance. The MS also provides reports at application on the initial cost plan and throughout the build on cost-to-complete. Their fees are typically included in the facility costs and drawn from the loan.
What is stretched senior finance and when should I use it?
Stretched senior is a single loan product that provides higher leverage — typically 80–85% LTC — than standard senior debt (typically 70% LTC), without the complexity of a senior and mezzanine split. It is provided by a single lender, simplifying legal and intercreditor arrangements. Rates are higher than pure senior debt but lower than a blended senior/mezzanine stack, and it suits developers who want clean, single-lender facilities.
How are affordable housing obligations treated within the appraisal?
Section 106 affordable housing units are typically transferred to a registered provider at a discounted value of 40–70% of open market value. This discount is a cost within the development appraisal and reduces the overall GDV. Lenders assess the appraisal with the full affordable housing obligation included. Viability discussions with the LPA before planning submission can sometimes reduce obligations on marginal schemes — evidenced viability assessments are increasingly important.

Related project types

Ground-Up Development Mixed-Use Development Development Exit Finance

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