Development Finance Rates 2026 — Updated October 2026
- Low-leverage ground-up
- From 8.8% p.a.Low-leverage ground-up
- Typical senior range
- 9.5%–12%Typical senior range
- Senior debt
- Up to 65%–70% LTGDVSenior debt
- Last updated
- October 2026Last updated
UK development finance rates start from about 8.8% a year for low-leverage ground-up schemes (Funding 365: 0.74% a month rolled, up to 60% LTV net day one). Most senior facilities price between 9.5% and 12% a year — London Credit's Prime Development range starts at 9.5% at 65% LTGDV and 10% at 70%. Interest is charged only on money drawn, and fees usually add 3%–5% of the facility.
Development Finance Rates by LTGDV — October 2026
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| Leverage | Indicative rate | Typical lender |
|---|---|---|
| Up to 60% LTGDV | from 8.8% p.a. | Specialist lenders, experienced developers |
| 65% LTGDV | from 9.5% p.a. | Specialist and challenger lenders |
| 70% LTGDV | from 10.0% p.a. | Specialist lenders |
| Stretched senior, 75% LTGDV / up to 90% LTC | 10.5%–12%+ | Stretched-senior lenders |
| Senior + mezzanine to 90% LTC | blended 10%–12%; mezz 12%–18% | Two lenders |
What determines your rate
LTGDV (Loan to Gross Development Value)
The primary metric for development finance pricing. 65% LTGDV = the total facility is 65% of the projected end value of the completed scheme. The lower the LTGDV, the better the rate. Above 70% LTGDV, mezzanine is typically required.
Developer track record
Experienced developers with completed comparable schemes access the sharpest rates. First-time developers typically pay 1%–2% more and face stricter conditions (monitoring surveyors, drawdown controls, personal guarantees).
Planning status
Full planning permission in place is the minimum most development lenders require. Outline planning or permitted development can be funded but at a premium. Planning uncertainty is priced heavily.
Scheme type
Prime residential attracts the best rates and widest lender choice. Social housing / affordable is supported by grant structures. Commercial and mixed-use narrows the lender pool and widens rates.
GDC (Gross Development Cost)
Lenders also cap the facility as a percentage of GDC (total project cost including land). Typically 80%–90% of GDC. A robust and independently verified cost plan reduces lender concern and improves terms.
Profit on GDV
Lenders typically require a minimum profit margin of 15%–20% on GDV. Schemes with tighter margins face harder underwriting. A RICS-assessed appraisal demonstrating the profit cushion is essential.
Worked cost 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
Scenario: 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
Interest accrues on drawn amounts only — not the full facility from day one.
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The figures above are indicative and describe the best case. Send your own scenario and we will come back the same working day with terms from the lenders that actually fit it.
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- Development Rates
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Whole of market · 130+ lenders · FCA 814533 · Same working day response
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
What does LTGDV mean and why does it matter?
LTGDV is Loan to Gross Development Value — the total facility as a percentage of the projected end value of the completed development. It differs from LTV (which uses current value) because development finance is secured against a property being created, not one that already exists. A 65% LTGDV means the lender will fund up to 65% of what the scheme will be worth when complete. The higher the LTGDV, the more risk for the lender and the higher the rate.
How is interest charged on development finance?
Interest accrues on drawn amounts only — not the full facility from day one. As funds are drawn in stages (for land, then build in tranches), the interest charge builds gradually. This makes development finance significantly cheaper than its headline rate suggests — because in the early months, only the land purchase has been drawn and build cost drawdowns accumulate over time.
What is a monitoring surveyor and do I need one?
A monitoring surveyor (also called a project monitor) is appointed by the lender to independently review the build programme, cost plan, and each drawdown request before funds are released. They are almost always required by development finance lenders on residential and commercial schemes. Their fees (typically £5,000–£15,000 depending on scheme size) are a cost of the finance.
Can I fund 100% of development costs?
Not typically through conventional development finance. Most lenders fund 60%–70% LTGDV of the end value. Some lenders can reach 80%–85% LTGDV through mezzanine, which covers the gap between the senior debt cap and the total cost. True 100% funding is rare and usually only available where the developer has other security or the scheme has exceptional margins.
What is the minimum scheme size for development finance?
Most development finance lenders have minimum facilities of £250,000–£500,000. For smaller schemes (1–2 units), bridging finance with a development element is often more appropriate. For larger schemes (£5m+), private banks and specialist development funders provide bespoke structures.
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