Development Finance Costs & Fees 2026 — Updated October 2026
- Interest rate
- From 8.8% p.a.Interest rate
- Arrangement fee
- 1%–2%Arrangement fee
- Typical exit fee
- 1%–1.5% of GDVTypical exit fee
- Rolled up, repaid at exit
- Interest on drawn funds onlyRolled up, repaid at exit
Development finance costs more than the headline rate suggests, but less than people fear, because interest is charged only on money drawn. In October 2026 rates run from 8.8% to 12% a year, and fees usually add 3%–5% of the facility. On the scheme below, total finance costs are about 32% of the developer's profit before finance.
Development Finance Costs and Fees — October 2026
Swipe the table sideways to see every column.
| Cost | Typical level |
|---|---|
| Interest | 8.8%–12% p.a., rolled up, charged on drawn balance |
| Arrangement fee | 1%–2% of facility |
| Exit fee | 1%–1.5% of GDV (some lenders charge on loan instead) |
| Monitoring surveyor | c.£750–£1,500 per drawdown visit |
| Valuation and legal | scheme-dependent |
What development finance costs: worked example
- Interest at 9.5%, rolled, 18 months
- £170,551
- Arrangement fee 2%
- £30,000
- Exit fee 1% of GDV
- £26,000
- Monitoring surveyor
- £12,000
- Valuation
- £6,000
- Legal
- £10,000
- Total finance cost
- £254,551
- Profit before finance
- £800,000
- Profit after finance
- £545,449
Land £600,000, build £1.2m over 12 months, sold over the following 6 months, GDV £2.6m. Facility £1.5m: 50% of land (£300,000) plus all build costs — 57.7% LTGDV, 83% LTC.
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- Development Finance Costs
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Rate context and outlook
Senior development finance currently prices from about 8.8% a year for low-leverage ground-up schemes, with most facilities at 9.5%–12%. Bank Rate is 3.75% after the 17 September hold; development lenders price off their own funding costs, so rates have stayed stable through the September swap-rate rise, and some lenders cut margins over the summer.
Lenders now expect tighter information on build costs, drawdowns and exit before committing.
Reviewed by David Doulton, Director, Doulton Bridging Finance — over 20 years in property finance. Last reviewed 1 October 2026. Doulton Money Ltd t/a Doulton Bridging Finance, FCA No. 814533.
Frequently asked questions
Is interest charged on the full facility?
No — only on what has been drawn, rolled up and repaid at the end.
What is a non-utilisation fee?
Some lenders charge a small fee on undrawn funds; ask before you sign.
Can fees be added to the loan?
Usually yes, which increases the interest.
How is rolled-up development interest calculated?
Monthly on the balance drawn so far, including previously rolled interest, and repaid from sales or refinance.
What profit margin do lenders expect?
Typically at least 15%–20% profit on GDV after all costs, including finance.
Are fees charged on GDV or the loan?
Arrangement fees are on the facility; exit fees are charged on GDV or on the loan, depending on the lender.
How are funds released?
In stages as the build progresses, usually in arrears, after a monitoring surveyor confirms the work is done.
Do I need planning permission?
Senior development finance usually requires full planning; sites without it are funded with land bridging first.
How long does it take to arrange?
Usually 4–8 weeks, depending on valuation, the monitoring surveyor and legal work.
What is the difference between LTGDV and LTC?
LTGDV compares the loan with the finished value; LTC compares it with total costs. Lenders apply whichever is lower.
What if the build overruns?
Lenders expect a 5%–10% contingency. Overruns beyond it are usually funded by the developer, or by agreeing an extension.
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Independent whole-of-market advice · FCA No. 814533