Bridging Finance For Property Development

Bridging finance for property development is short-term, secured property finance used at points in a development project where senior development finance is not yet available, no longer suitable, or not the cheapest option. The four most common uses are site acquisition, holding the site through planning or Building Safety Act Gateway 2 approval, refurbishment and conversion, and development exit at practical completion. FD Commercial arranges development bridging from £250,000 across England, Scotland and Wales.

What is bridging finance for property development?

Bridging finance for property development is short-term, secured property finance used at points in a development project where a senior development finance facility is not yet available, no longer suitable, or simply not the cheapest option. It is not an alternative to development finance for most projects. It sits alongside it.

The four common uses are site acquisition before a development facility is ready to draw, holding the site through planning or Building Safety Act Gateway 2 approval, funding refurbishment or conversion projects too small or too short for traditional development finance, and exiting a completed development at practical completion. Terms typically run from 6 to 24 months. Loans typically price from 0.65% to 1.10% per month depending on the use case. Gross LTV typically 60% to 75%.

Most of the bridging cases we arrange for developers sit alongside a senior development facility that is either approved in principle (waiting on a regulatory trigger) or has just expired (units still to sell). The bridge buys time. The development facility funds the build. Treating the two as a single coordinated finance package rather than two separate transactions is the structural feature that makes the cost-of-capital work for the developer.

When do developers use bridging instead of (or alongside) development finance?

Bridging is used in property development when the timing, structure or scale of the requirement does not suit a senior development facility on its own. Five typical scenarios cover most of the cases that come into FD Commercial.

Speed. Site acquisition where the seller (or auctioneer) needs a faster completion than a development lender can underwrite. Most senior development facilities take 8 to 12 weeks from offer to drawdown. A bridge completes in 2 to 6 weeks against the site, then refinances onto development finance when construction is ready to commence.

Regulatory hold. Higher-Risk Buildings (residential schemes at least 18 metres or 7+ storeys) cannot lawfully commence construction without Building Safety Regulator Gateway 2 approval. Median Gateway 2 approval time across England was 22 weeks as at March 2026 per BSR data, with London HRBs ranging 13 to 48 weeks. The bridge holds the site while the BSR approval works through.

Scale of the works. Refurbishment and conversion projects too small for senior development finance (under £500,000 net advance) but too structural for a standard buy-to-let mortgage. A refurbishment bridge funds the works, then refinances onto term BTL or commercial investment finance on completion of the works and rental of the units.

Exit timing. Senior development facilities have hard expiry dates. If the build is complete but units are not yet sold, the developer faces forced disposal of completed stock at unfavourable prices. Development exit bridging refinances the senior facility at practical completion and gives the developer 6 to 18 months to market the completed units at sensible values.

Off-market opportunity. Site purchases that come to market with short windows, off-market introductions through agents or planning consultants, distressed sales, or auction lots. The bridge is the only finance product fast enough to complete on these. Senior development finance picks the case up later.

What are the main uses of bridging across a UK property development project?

The use cases below are the structures we arrange most often for UK developers in 2026. Each links through to the relevant detailed page or finance guide where applicable.

Site acquisition bridging

Bridging to fund the purchase of a development site, typically against a tight completion deadline. The developer has identified the site, agreed terms, sometimes won at auction, and needs to complete in 2 to 6 weeks. Senior development finance is approved in principle but cannot draw in time. Gross LTV typically 65% to 75% against the site purchase price. The bridge runs for 6 to 12 months while planning is finalised, the contractor is procured, the QS cost plan is finalised, and the senior development facility moves to formal offer. On the development facility's first drawdown, the bridge clears in full.

Planning and Gateway 2 hold bridging

Bridging to hold a site through planning consent or, on Higher-Risk Buildings, through Building Safety Act Gateway 2 approval. Planning hold bridging typically runs 12 months with rolled-up interest, refinancing onto development finance on planning consent. Gateway 2 hold bridging typically runs 12 to 24 months because of the longer BSR queue, with the development facility heads of terms agreed in parallel and contractually staged to refinance the bridge on BSR sign-off. Gross LTV 55% to 70% reflecting the regulatory uncertainty. Rate 0.75% to 1.10% per month.

Refurbishment and conversion bridging

Bridging to fund light or heavy refurbishment projects, permitted development conversions (office to residential, commercial to residential), and houses-to-flats conversions. Light refurbishment bridging funds cosmetic and non-structural work, typical gross LTV 70% to 75%, term 6 to 12 months. Heavy refurbishment bridging funds structural change, layout reconfiguration, extensions and full re-fit, typical gross LTV 65% to 75%, term 12 to 18 months. Exit is either sale of the completed property or refinance onto BTL term mortgage or commercial investment finance.

Development exit bridging (sales bridging)

Bridging at practical completion to refinance the senior development facility and give the developer 6 to 18 months to sell or let units without forced disposal. The original development facility typically expires shortly after PC, and extending it carries punitive default rates. Development exit bridging refinances the development facility at PC, typically at a sharper rate (0.65% to 0.85% per month) and a higher LTV (up to 70% to 75% of GDV) because the construction risk has been removed. Used by developers selling units in sequence, or retaining some units long-term on BTL or commercial mortgages.

Permitted development conversion bridging

Bridging for permitted development right conversions where the developer is converting an existing commercial or industrial building to residential use under Class MA, Class O, or other permitted development rights, without full planning permission for change of use. The works can typically commence quickly once prior approval is granted. PD conversion bridges are popular with first-time developers because the planning risk is lower and the build phase is shorter. Typical gross LTV 70% to 75%. Term 9 to 18 months. Exit onto BTL portfolio finance or unit sales.

What LTV, rates and terms are available on development bridging in 2026?

The table below sets out typical 2026 terms across the four main use cases. These are indicative ranges based on the cases we have arranged across our development bridging book. Actual terms depend on the security, the borrower, the scheme economics and the credibility of the exit.

Interest is normally rolled up to exit rather than serviced monthly because the underlying site or development is not generating income during the bridge term. Arrangement fees typically 1.5% to 2% of the facility amount. Exit fees vary by lender, with some no-exit-fee structures available. ERCs typically nil after the first three months on well-structured facilities.

How does bridging fit alongside the senior development finance facility?

Most development bridging cases involve a senior development finance facility either approved in principle and waiting to draw, or just expired and needing to be cleared. The bridge funds the position outside the senior facility's drawdown window.

Before construction. The bridge funds site acquisition or holds the position through planning or Gateway 2 approval. The senior development facility is approved in principle by the senior lender (heads of terms issued, conditional on the regulatory trigger). On the trigger (planning consent, Gateway 2 approval, contractor procurement), the development facility's first construction drawdown clears the bridge in full. The developer transitions from bridge to development facility without a refinance gap.

After construction. The bridge funds the post-PC position while units are sold or let. The senior development facility expires at or shortly after practical completion. The development exit bridge refinances the senior facility at PC. The developer markets units at sensible prices over 6 to 18 months. As units sell, sale proceeds clear the bridge progressively until the facility is redeemed.

The structural feature that gets these cases approved is running the bridging and senior facility conversations in parallel rather than in sequence. The bridging lender's credit committee sees the senior facility's commitment letter before underwriting the bridge. The senior lender sees the bridge that will fund the position to the trigger. Each lender's commitment is contingent on the other's. That is how the cost-of-capital works for the developer and the risk position works for both lenders.

Worked example: bridging a site acquisition then refinancing onto development finance

FD Commercial case in progress: £12m London MUFB Gateway 2 bridge to development finance

What exit strategies do lenders accept on a development bridge?

The credibility of the exit is the dominant underwriting question on every development bridge. Lenders accept four main exit routes, each with its own evidence requirements.

Refinance onto senior development finance. The strongest exit route for bridges holding the position before construction. The bridging lender wants to see the senior facility's heads of terms or formal offer at the point of credit approval. Conditional take-out commitment is acceptable on Gateway 2 cases provided the conditions are satisfiable.

Sale of completed units. The standard exit on development exit bridging. The bridging lender wants to see comparable sales evidence in the local market, a marketing plan with named estate agents, indicative pricing supported by the RICS valuation, and a realistic sell-out timeline. Pre-sold or reserved units strengthen the exit materially.

Refinance onto term mortgage finance. For retained-asset developers. The exit is a BTL portfolio facility, a commercial investment mortgage, or an owner-occupier mortgage. The bridging lender wants to see indicative terms from the take-out lender and confirmation that the property will let or trade at the rental or income level required.

Sale of the development as a whole. For institutional or build-to-rent exits. The bridging lender wants to see expressions of interest from named institutional buyers, a forward-sale contract where applicable, and an exit yield that supports the headline price. Less common but used on larger schemes.

How do you arrange bridging for a property development?

The process below is how we arrange a development bridge at FD Commercial. Standard cases run 2 to 6 weeks from initial enquiry to first drawdown. Auction cases compress to 2 to 4 weeks.

1. Initial call to map the scheme and the exit. Planning status, security profile, build cost, GDV, professional team, timing constraints, and the intended exit. The exit is the dominant underwriting question on every development bridge. Without a credible exit, no lender will write the facility regardless of LTV.
2. Build the bridging and development lender shortlist. Two to four bridging lenders with appetite for the use case. Where the exit is onto senior development finance, the development lender conversations run in parallel rather than in sequence.
3. Issue indicative terms. Within 48 to 72 hours, indicative terms covering loan amount, gross LTV, monthly rate, retained interest, arrangement fee, term, exit fee, ERCs, and security profile.
4. Instruct RICS valuation and legals. Valuer typically reports both open-market value and GDV where applicable. Solicitor instructed in parallel on title due diligence. Both complete within 2 to 3 weeks.
5. Underwriting and formal offer. Lender's credit underwriter reviews valuation, legal report, KYC pack and any conditions specific to the use case. Formal offer issued on approval.
6. Drawdown and exit management. First drawdown on completion. Retained interest reserved. We monitor the case through to the exit trigger and manage redemption with the lender.

Top 10 things to know about bridging finance for property development in 2026

1. Bridging is not an alternative to development finance for most projects. It sits alongside it, funding the position before or after the senior facility's drawdown window.
2. The exit is the dominant underwriting question. LTV, rate and term all flow from the credibility of the exit, not the other way round.
3. Site acquisition bridging completes in 2 to 6 weeks. Senior development finance typically takes 8 to 12 weeks. The bridge bridges the gap.
4. Gateway 2 hold bridging is now a standard product on London HRB schemes. Median BSR approval 22 weeks per March 2026 data, London range 13 to 48 weeks.
5. Development exit bridging refinances the senior facility at PC. Gives 6 to 18 months to sell units at sensible values rather than under forced disposal pressure.
6. Run bridging and senior development conversations in parallel. Each lender's credit committee sees the other's commitment. The structure is meaningfully different to either lender writing in isolation.
7. Interest is normally rolled up to exit. Underlying site is not generating income. Net day-one drawdown is lower than the headline facility size after retained interest, fees and reserves.
8. First-time developers can access development bridging. Best fit is permitted development conversion or small refurbishment. Strong professional team and clear exit clear the credit hurdle.
9. Minimum loan size at FD Commercial is £250,000. Middle of the book sits at £1m to £15m. Cases above £50m arranged on specialist basis with cross-collateralisation.
10. FD Commercial does not charge broker fees on most bridging cases. Where a fee is charged it is disclosed at indicative terms stage before the application proceeds.

Bridging finance for property development: FAQ