Development Finance For First-Time Developers
Development finance for first-time developers is short-term funding that covers the cost of purchasing land or property and carrying out a development or conversion scheme in the UK, where the borrower has no prior development track record. Most specialist lenders will consider first-time applications. What they look at instead of experience is the quality of your professional team, the strength of your exit, and whether the scheme is sized appropriately for where you are in your career as a developer.
FD Commercial arranges development finance for first-time developers from £250,000 across England, Scotland and Wales. Our broker fee is up to 1% of the loan amount.
Rates and lending metrics are indicative. They vary by lender, scheme type, location and borrower profile. Speak to us for figures specific to your project.
What lenders look for when there is no track record
The absence of a development track record does not disqualify you from getting UK development finance. It changes where lenders focus their attention. With an experienced developer, lenders lean on the borrower's history of completed schemes. With a first-timer, they lean instead on three things: the professional team around you, the quality of the scheme itself, and the exit strategy.
Your contractor matters most. Lenders will look for evidence of completed projects at a comparable value and complexity: not just references but verifiable completed schemes. Your architect needs professional accreditation. Your quantity surveyor's cost schedule will be reviewed critically, often against the lender's own monitoring surveyor. A QS assessment that underestimates costs is the fastest way to lose a lender's confidence. Build in a minimum 10% contingency on construction costs and make sure the QS signs off on it.
The project manager role is increasingly accepted as a substitute for developer experience. If you are bringing in an experienced PM to oversee the build on your behalf, and that PM has a credible track record, some lenders will treat this similarly to the developer having direct experience. It is not a universal position, but it opens doors that would otherwise be closed.
According to the Bayes Business School UK Commercial Real Estate Lending Survey 2024, UK lenders held £31 billion in development loans on their books, representing 22% of all new commercial real estate lending. Development finance remains an active and competitive part of the UK lending market.
According to MHCLG housing starts data, SME developers delivering fewer than 100 units per year accounted for around 12% of new housing starts in England in 2023–24, down from over 30% in the early 2000s. Restricted access to development finance is consistently cited as the primary barrier to growth for smaller and first-time developers.
Which scheme types work for first-time developers?
Not all schemes are equal in the eyes of a lender. For first-timers, the scheme type is often as important as everything else. If you are bridging to purchase a site before applying for planning, our guide to regulated and unregulated bridging explains which route applies. These are the most fundable development schemes for first-time developers in the UK:
Permitted development conversions
Office-to-residential and commercial-to-residential conversions under permitted development rights sit at the more straightforward end of the risk spectrum. The structural shell already exists, which removes a layer of build risk. Lenders are generally more comfortable, LTC availability is higher and the pool of participating lenders is wider. If you are choosing your first scheme specifically with finance in mind, permitted development conversion is the most accessible starting point. See our permitted development finance guide for a full breakdown of Class MA, Class Q and other routes.
Small residential conversions
Converting a house into two or three flats, or a commercial unit into residential, sits in similar territory. One to four units is the comfort zone for most lenders when a first-time developer is involved. The key variables are planning consent, structural condition and comparable sales evidence for the completed units.
Ground-up new build
Fundable for first-time developers, but the underwriting is more demanding. Lenders will scrutinise the contractor more heavily, want a more detailed monitoring process and will typically lend at lower LTC and LTGDV than for conversions. Smaller ground-up schemes of two or three units rather than a ten-unit block are more straightforward to place.
LTC and LTGDV: what first-timers can expect
Development finance is sized against two measures: LTC (loan to cost) and LTGDV (loan to gross development value). Lenders apply both and advance whichever produces the lower figure.
| Metric | First-time developer | Experienced developer |
|---|---|---|
| Max LTC | Up to 75% | Up to 85–90% |
| Max LTGDV | Up to 70% | Up to 70–75% |
| Rate (per month) | 0.85–1.15% | 0.65–0.95% |
| Arrangement fee | 1–2% of gross loan | 1–2% of gross loan |
| Minimum scheme size | 1–4 units preferred | No restriction |
These figures narrow as your team gets stronger. A first-time developer with an experienced contractor, a credible QS schedule and pre-agreed sales on the completed units can achieve terms closer to the experienced end of the range.
What development finance actually costs
The worked example below is for a first-time developer undertaking a conversion of a commercial building into four apartments in the North of England. Total development cost: £800,000. GDV on completion: £1,300,000.
Worked example: £800,000 project cost
- Gross loan (75% LTC / 65% LTGDV): £600,000 (LTGDV binds at £845,000, LTC binds at £600,000)
- Arrangement fee (1.5%): £9,000
- Monitoring surveyor fees (0.75%): £4,500
- Valuation fee: £1,500–£2,500
- Interest at 1% per month, 12 months, rolled up: approx. £72,000
- Broker fee (up to 1%): £6,000
- Total indicative finance costs: approx. £95,000–£97,000
- Equity required (project cost minus gross loan): £200,000
The figures above are indicative. Actual costs depend on lender, term, rate achieved and whether interest is drawn in full on day one or released in tranches alongside drawdowns. In most UK development finance structures, interest accrues on drawn funds only, which reduces the total interest cost if your drawdown schedule is efficient.
How to apply for development finance as a first-time developer
Development finance applications involve more due diligence than bridging or buy-to-let mortgage applications. UK lenders instruct both a valuer and a monitoring surveyor before offering terms. Having the following ready before approaching lenders shortens the timeline significantly.
You will need: full planning permission (or prior approval for permitted development), a QS cost schedule including contingency, architect drawings, contractor details with evidence of comparable completed schemes, confirmation of land or property ownership, details of your proposed exit (presales, agents' valuations, refinance evidence), and a specialist broker engaged to manage lender selection and the submission.
Realistic timeline for a first-time developer on a conversion scheme: four to eight weeks from submission to first drawdown. For a full breakdown of how funds are released at each stage, see our development finance drawdown guide. Ground-up new build typically runs six to ten weeks. The main variables are how quickly the valuer and monitoring surveyor can be instructed and how long they take to report.
Case study
Permitted development conversion, Midlands. First-time developer.
A client with no prior development track record purchased a redundant office building under permitted development rights for conversion into six apartments. GDV on completion: £1.1 million. Project cost: £680,000.
The client brought an experienced main contractor with three comparable completed conversions and a RICS-accredited QS. FD Commercial placed the case with a specialist development lender at 70% LTC and 60% LTGDV, rate of 1.05% per month, rolled-up interest. First drawdown achieved six weeks after initial instruction. The client completed on schedule and sold four of the six units within two months of practical completion, repaying the facility in full. Two units were retained and refinanced onto buy-to-let mortgages.
Joint venture with an experienced developer
If the scheme is large, complex or ground-up on a site where you cannot fund the required equity alone, a joint venture with an experienced developer is worth considering. From a lender's perspective, the experienced partner is often treated as the primary developer, which can unlock better LTC, lower rates and a wider lender pool.
The trade-off is profit share and reduced control. Before approaching lenders, you need a clear legal agreement covering profit split, decision-making rights, what happens if one party defaults, and how the security is structured. Lenders will want to see this documentation before they issue terms.
JV structures work best where the first-timer brings a site or planning permission and the experienced partner brings credibility and capital. They are less effective where both parties are contributing equity but neither has material development experience.
Frequently asked questions
Can I get development finance with no track record?
Yes. Most specialist lenders in the UK will consider first-time developers, but they place greater weight on the professional team around you: your contractor, architect, quantity surveyor and project manager. They also weigh heavily on the quality of your exit strategy. Smaller schemes, permitted development conversions and projects with strong comparable sales evidence are more straightforward to place. The loan amount, LTC and LTGDV will typically be lower than for an experienced developer, and the rate will be higher, but deals do get done.
What LTC and LTGDV can a first-time developer expect?
Most UK lenders will offer first-time developers up to 70–75% LTC and 60–70% LTGDV. Experienced developers access up to 85–90% LTC and 70–75% LTGDV. The gap narrows if your professional team is strong, your scheme is straightforward and your exit is evidenced with comparable sales data.
What size scheme should a first-time developer start with?
Lenders are most comfortable funding first-time developers on schemes of one to four units. Conversions and permitted development projects are easier to place than ground-up new build. A single house conversion or small apartment conversion is a sensible starting point. Ground-up is fundable, but fewer lenders will participate and underwriting is stricter.
What does my professional team need to look like?
Your contractor needs a verifiable track record on comparable schemes. Your architect and quantity surveyor should be professionally accredited. The QS cost schedule will be scrutinised by the lender's own monitoring surveyor, so it needs to be robust with at least a 10% contingency. If your contractor is less experienced, an experienced project manager overseeing the build is accepted by some lenders.
What is the difference between LTC and LTGDV?
LTC measures the loan as a percentage of your total project costs. LTGDV measures it as a percentage of the completed development value. Lenders apply both tests and advance whichever produces the lower figure. For first-time developers, LTGDV is usually the binding constraint.
What does development finance cost for a first-time developer?
Expect to pay 0.85–1.15% per month in interest, an arrangement fee of 1–2% of the gross loan, valuation fees, monitoring surveyor fees of around 0.5–1% of the loan, and legal costs. Interest is usually rolled up. FD Commercial's broker fee is up to 1% of the loan amount. On a £1 million gross loan over 12 months, total finance costs could reasonably reach £150,000–£200,000 depending on the lender and structure.
Should I consider a joint venture with an experienced developer?
It is worth considering if the scheme is large, complex or ground-up on a site you could not otherwise fund at the LTC you need. An experienced JV partner brings lender credibility and may unlock better terms. The trade-off is profit share and reduced control. Structure and security need to be agreed legally before approaching lenders.
How long does development finance take to arrange for a first-time developer?
For a conversion or permitted development scheme with a complete application pack, allow four to eight weeks from submission to first drawdown. Ground-up new build typically takes six to ten weeks. Having planning permission, a full cost schedule, contractor contracts and drawings ready from day one reduces the timeline significantly.
What happens if my project runs over budget or timeline?
Development finance lenders build a contingency into the cost schedule for exactly this reason. If costs overrun beyond the contingency, you fund the difference. Interest accrues on the outstanding balance throughout, so a timeline overrun increases your total interest cost. Communicate with your lender early if problems arise. Lenders would rather know before the monitoring surveyor does.
Is permitted development finance easier to arrange for a first-time developer?
Generally yes. Permitted development conversions (office-to-residential, commercial-to-residential) carry lower build risk than ground-up because the structural shell exists. Lenders are more comfortable with the risk profile, which typically means higher LTC availability and a wider lender pool.
Your first development scheme needs to be placed with the right lender from the start. We know which UK lenders take first-time developers seriously and how to structure the application so it lands well.
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