Ground-up development finance typically funds up to 60–65% of Gross Development Value
Ground-up development finance typically funds up to 60–65% of Gross Development Value, meaning developers need a proven track record and retained equity to access the most competitive terms.
Ground-up development finance typically funds up to 60–65% of Gross Development Value, meaning developers need a proven track record and retained equity to access the most competitive terms.
For ambitious ground-up construction projects, high street banks are famously risk-averse, leaving the market to specialist development lenders. These lenders underwrite based on two metrics: Loan-to-Cost (LTC), typically capped at 85-90%, and Loan-to-Gross Development Value (LTGDV), typically capped at 65%. This conservative LTGDV cap ensures the lender has a massive 35% equity buffer against market downturns.
To secure these facilities, developers must contribute 'Day One' equity (often 30-40% of the initial land purchase). Furthermore, lenders prioritize the developer's CV; they want to see a track record of successfully exiting similar-sized projects. Without this, developers may be forced to use expensive mezzanine finance or joint venture equity partners to plug the capital gap.