| Location | Greater Manchester |
| Property | 18-unit residential new-build block |
| GDV | £3.2m–£3.3m |
| Existing loan | £2.1m development finance, 6 weeks to expiry |
| Units sold at enquiry | 4 (off-plan); 14 unsold |
| Loan type | Development exit sales bridging |
| Facility | £2.44m gross |
| Term | 15 months |
| Interest | Rolled up (retained) |
| Repayment | Pro-rata as units sold |
| Security | First charge over completed 18-unit block |
| Saving vs extension | Over £70,000 |
| Completion | Under 4 weeks from initial enquiry, late 2024 |
The situation
In Autumn 2024, a developer in Greater Manchester reached practical completion on a new-build block of 18 residential flats. The scheme was well located, built to a good specification, and had already attracted four off-plan sales. The construction phase was finished. The development loan, however, was expiring in six weeks, with 14 units still unsold.
The developer's existing lender offered an extension. The terms were: a 1.5% extension fee on the £2.1m outstanding balance (approximately £31,500), an increased interest margin of 0.3–0.4% per month above the current rate, tighter monitoring covenants, and additional legal costs. Modelled over a realistic 12–15 month sales period, the total additional cost of staying with the existing lender exceeded £70,000. That figure would come directly out of the developer's profit margin.
The commercial pressure
The financial cost was one part of the problem. The operational pressure was another. With a tight extension window and rising monthly costs, the developer faced a choice between accepting discounted offers to clear the loan faster or running out of time entirely. In the Greater Manchester market in late 2024, buyers of well-located apartments existed, but they were taking longer to transact than in previous years, driven by higher mortgage costs and cautious buyer sentiment. Selling 14 units at full market value in six to twelve weeks was not realistic. Selling them over 12 to 15 months was.
How we structured the exit facility
We assessed the completed scheme, reviewed the RICS valuation, the off-plan sale pipeline, and the developer's target sales timeline. We then approached specialist lenders with appetite for post-completion residential blocks in the North West and negotiated a development exit sales bridging facility structured specifically around the developer's objectives.
| Term | Detail |
|---|---|
| Facility size | £2.44m gross |
| Purpose | Repayment of £2.1m existing development loan, arrangement and legal costs, marketing and snagging budget, retained interest for full term |
| Term | 15 months |
| Interest | Rolled up, no monthly payments required |
| Repayment | Pro-rata reductions as individual units sold |
| Monthly rate | Lower than both the original development loan and the proposed extension |
| Security | First charge over the completed 18-unit block |
Development exit finance carries a lower rate than construction-phase development finance because the risk profile is fundamentally different at practical completion. The building is finished. There is no contractor risk, no programme delay, no cost overrun exposure. The security is tangible and marketable. Specialist lenders price on the actual risk remaining, which at this stage is primarily the sale execution risk, not the construction risk that no longer exists. The developer's existing lender was still charging construction-era pricing. The exit market was not.
With six weeks until the original loan expired, timing was the overriding constraint. From initial enquiry to funds drawn took under four weeks: indicative terms within 48 hours, lender selected within a week, valuation instructed immediately, formal offer by week three, completion by week four. The existing development loan was repaid on the same day the new facility drew down, with no period of double interest running simultaneously.
The cases where extension terms look most expensive are usually the ones where the developer leaves it too late. By the time there are six weeks left on a development loan, the existing lender knows their position. Three months earlier, there would have been more to negotiate. We see this pattern regularly.
The outcome
Over the following 14 months, the remaining 14 units sold at or close to asking price. No forced discounting occurred. Buyers were predominantly local owner-occupiers and property investors, absorbed at a measured pace that the 15-month term accommodated. Several units were retained rather than sold and refinanced onto buy-to-let mortgages once tenanted, building an ongoing income stream for the developer. Total savings against the existing lender's extension terms, including the extension fee and the higher interest margin, exceeded £70,000. The developer completed the project at full value and moved on to the next scheme with a clean exit and intact profit margin.
Rates quoted are indicative and subject to change. Actual rates depend on individual circumstances, security, and lender appetite at the time of application. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
We arrange development exit finance from £250,000 across the UK. No broker fees.
Call 03300 100315