£12m London MUFB: Gateway 2 Bridge to Development Finance

The situation

A London developer came to us with a Higher-Risk Building MUFB scheme that had run out of construction runway. Planning consent was in place. Enabling works had been completed to the maximum extent allowed under the Building Safety Act 2022 regime before a Gateway 2 approval is required. The site could go no further. The developer's senior development finance approval was conditional on Gateway 2 being in hand. With the BSR queue still sitting at multiple months for London HRB applications in 2026, the scheme had stalled.

The developer needed two things from a single broker call. First, a holding facility that funded the position and covered interest while the Gateway 2 application worked through the BSR. Second, certainty that the development facility waiting at the other end of approval would actually draw without renegotiation. We structured a £12 million bridging facility at 68% gross LTV with an 18-month term and pre-agreed development finance behind it.

Why a standard development facility was not viable

The senior development lender's underwriting position was clear. Construction drawdowns would only release on Gateway 2 approval, the main contractor engaged, and the monitoring surveyor signed off. The lender was not prepared to fund the land or pre-construction position with no certainty on when full construction would commence. With BSR turnaround on London HRB applications still running well past the 12-week target, the developer would have been sitting on the land paying interest with no progress for an indeterminate period.

The Building Safety Regulator's own published data, reported in the construction trade press in March 2026, shows median Gateway 2 approval time at 22 weeks across England. London HRB schemes have been quoted at anything from 13 weeks at the fast end to 48 weeks at the slow end. For a developer who needed certainty over their finance position before committing to the next phase of professional fees and contractor mobilisation, the development facility alone did not solve the problem. The gap had to be bridged.

How the bridging facility was structured

We sourced terms from specialist bridging lenders writing larger facilities with appetite for HRB schemes mid-Gateway 2 wait. The final structure was a £12 million bridge at 68% gross LTV over 18 months, with the development finance facility from the senior lender approved in principle and contractually staged to refinance the bridge on Gateway 2 sign-off.

The two facilities were arranged together rather than sequentially. That mattered. A bridge written in isolation, with a refinance to be sourced 12 months later, would have cost the developer an extra round of underwriting at exit. By taking the development facility heads of terms to the bridging lender at the outset, the bridging underwriter could see exactly what the exit looked like, what the development lender's conditions were, and what the timeline of the refinance would be. That gave the bridging lender comfort to write a longer term at a sharper rate.

The 18-month term was deliberate. It gave the developer cover for the worst-case BSR queue position seen across London HRB applications in early 2026, plus a margin for any request for additional information from the regulator that resets the clock. If Gateway 2 had landed earlier, the bridge could be redeemed without penalty after the initial period. If the BSR took longer than expected, the developer was not facing a forced extension conversation at month 12 with the lender holding the position.

How the LTV worked at 68% gross

The 68% gross figure included everything: principal, retained interest across the full 18 months, arrangement fee, exit fee, and legal cost provisions. That is the LTV the lender reports and the figure that matters when the case is presented to credit. Net day-one drawdown after retained interest, fees and reserved costs was lower than the headline £12m, which is the conventional structure for a bridging facility with no monthly interest servicing.

For a London HRB MUFB scheme with planning consent and a confirmed development end-state, 68% gross is a competitive position. Some lenders were quoting at 60-65% gross. Some would have stretched to 70% on the strength of the planning consent and the pre-agreed development take-out. The structure we ended up with balanced LTV against the rate offered and the willingness of the lender to underwrite the Gateway 2 wait risk inside the term.

The development finance behind the bridge

The pre-agreed development facility was the structural anchor on the bridge underwriting. The senior development lender had reviewed the scheme, agreed terms on LTC and LTGDV, confirmed the contractor's competence, and issued heads of terms conditional only on Gateway 2 approval. Once the BSR signs off, the development facility refinances the bridge in full and funds the build through staged drawdowns against monitoring surveyor certificates.

Without that pre-agreed development position, the bridging lender would have been writing into uncertainty about the exit. With it, the bridge becomes a known-duration holding facility with a contractually staged refinance behind it. That is a meaningfully different underwriting proposition, and it is reflected in the rate and the LTV the bridging lender was prepared to write at.

Why this structure is becoming common on London HRB MUFBs

The combination of HRB classification, Gateway 2 sign-off queues, and senior development lenders requiring BSR approval before construction drawdowns is producing this structure repeatedly on London HRB MUFB schemes. A holding bridge, sized to cover the site and the BSR wait, with a development facility pre-agreed in parallel to refinance the bridge once Gateway 2 lands. Developers who try to wait for Gateway 2 first and arrange finance afterwards are losing months to underwriting at both ends. Developers who arrange the bridge and the development facility together compress the timeline and keep the scheme moving the moment the regulator signs off.

Timeline: enquiry to terms agreed

What got this case across the line in four weeks was running both lender conversations in parallel rather than in sequence. The bridging lender needed sight of the development take-out terms. The development lender needed sight of the bridge that would fund the position to Gateway 2. Each lender's credit committee saw the other lender's commitment letter before signing their own. The structure made sense to both because both could see the other side.

Exit strategy

The exit is contractually defined. On Gateway 2 approval from the Building Safety Regulator, the developer triggers the development finance facility. The development facility's first drawdown clears the bridging facility in full, including all rolled interest, exit fee and any retained reserves. From that point the developer is on the development facility's drawdown schedule, building out the MUFB scheme to practical completion, then moving through Gateway 3 sign-off and sales or lettings as planned.

Three scenarios were modelled on the bridging exit.

• Base case: Gateway 2 approval lands at month 9-12. Development facility refinances the bridge. Construction commences. Bridge interest accrued is well within the 18-month retention reserve.
• Slower case: Gateway 2 approval at month 15-17. Bridge interest fully utilised. Development refinance still fully covered within the 68% gross LTV ceiling because property value is unchanged.
• Worst case: Gateway 2 approval not received within 18 months. Bridge requires extension. Extension provisions and rate agreed up front. The pre-agreed development facility heads of terms remain valid subject to any LTV recheck. Developer also has the option of equity injection to reduce the bridge before extension if values have not moved.

The pre-agreed development facility gives the bridging lender comfort that the exit is not subject to a fresh underwriting exercise 12 months out. That is the structural feature that made the 18-month term and the 68% gross LTV achievable.

Risk considerations

A bridge-to-development structure on an HRB scheme mid-Gateway 2 wait carries identifiable risks that we discuss with the client up front. Gateway 2 approval is not guaranteed. The BSR can require additional design work, materials substitution, or fire safety strategy changes that materially affect the scheme economics. The pre-agreed development facility's commitment is heads-of-terms only until Gateway 2 lands, and any material change to the scheme can trigger a fresh credit review. The bridge's retained interest is a known cost that does not get recovered if the scheme stalls beyond the 18-month term.

We address each of these at structuring stage. The application pack going to the BSR was reviewed by a specialist building control consultant before submission to reduce the request-for-information cycle. The development facility's heads of terms include defined trigger conditions for any retrade. The bridge's extension provisions are agreed up front so a worst-case 18-month overrun is not negotiated under duress. And the developer's equity position in the scheme remains substantial enough to absorb the bridge's interest cost without forcing a sale.