✅ How does ground up development finance work?
It funds construction entirely from scratch — an empty plot, or a fully demolished site — which is why it carries the most construction risk of any property finance category: groundworks can reveal soil problems, services and archaeology a conversion never faces. Funding releases in stages tied to verified milestones; leverage is assessed on whichever is lower of 65–75% Loan to Cost and 55–65% LTGDV, with a realistic 20–25% equity contribution and rates of 6.5–9.5% for mainstream schemes. At £1m+ GDV, JV equity becomes genuinely cost-effective, and mezzanine can top up between the senior loan and your equity. First-timers: only ~30–40 of 100+ lenders will consider you. Money Pilot structures all of it across 200+ lenders at zero broker fees — FCA regulated (FRN: 968705).
There’s a meaningful difference between financing a conversion and financing a building that doesn’t exist yet. Ground-up development finance funds the latter, starting from an empty plot, or a site cleared down to nothing, through to a finished, sellable or lettable building. It’s the most construction-risk-heavy category of property finance, and lenders price and structure it accordingly.
Bank of England held base rate at 4.25% in June 2026 - waiting for inflation to cool.
73% of UK SMEs expect to grow in the next 12 months - confidence remains strong.
What is ground-up development finance?
Finance for constructing a new building entirely from scratch, an empty plot, or a site where an existing structure has been fully demolished first. Unlike a conversion, where walls, a roof, and much of the structure already exist, ground-up development means the entire building, foundations upward, is being created by the finance itself.
How is this different from refurbishment or conversion finance?
Considerably more of the project is unknown at the outset. Groundworks can reveal unexpected issues, poor soil conditions, unforeseen services, archaeological finds, that add cost and delay before a single wall goes up. There’s no existing structure reducing uncertainty, everything from the foundations upward is genuinely new, which extends both the realistic timeline and the range of things that can affect the budget compared with a conversion project.
How is the loan structured?
Like other forms of development finance, funding is released in stages, tied to verified construction milestones, foundations complete, structure to roof level, first fix, second fix, and so on, rather than as a single lump sum. An independent monitoring surveyor inspects progress at each stage before the next tranche releases.
What LTV and LTGDV can you expect?
Typically assessed against two figures, with the lender applying whichever produces the more conservative number:
- Loan to Cost (LTC): commonly 65-75% of total build costs, land plus construction
- Loan to Gross Development Value (LTGDV): commonly 55-65% of the projected finished value, though this narrows for first-time developers, often to around 50-60%
What deposit or equity contribution should you plan for?
A realistic minimum of around 20-25% of total costs, though this varies with experience, scheme complexity, and the strength of the rest of your application. Experienced developers with a delivered track record can sometimes access higher leverage than a first-time developer attempting a similar scheme.
What rate should you expect?
Currently in the region of 6.5% to 9.5% per annum for mainstream schemes with experienced developers, stretching higher, sometimes into double figures, for complex or higher-leverage deals, or those involving first-time developers. Development finance pricing has settled at levels reflecting the Bank of England base rate, though lenders price development risk on top of the base rate rather than tracking it directly.
Which lenders actually operate in ground-up development finance?
Several specialist names have built genuine expertise here, including Hilltop Credit Partners, recognised specifically for property development finance, alongside Octane Capital and Pluto Finance, offering bridging, development, and investment finance together, and Tuscan Capital, known for flexible short-term property lending across a range of borrowing requirements.
What about larger ground-up schemes, is there an alternative to a straightforward development loan?
For schemes with a Gross Development Value of £1 million or more, joint venture (JV) equity finance becomes genuinely cost-effective, bringing in an equity partner who takes a share of the project’s profit in exchange for capital, rather than charging a fixed interest rate. Below that threshold, the administrative and legal cost of setting up a formal JV structure often isn’t proportionate to the project’s value, and bridging finance, mezzanine finance, or the developer’s own capital tend to be the more practical route instead.
What is mezzanine finance, and does it help with ground-up schemes?
Mezzanine finance sits between your senior development loan and your own equity in the capital stack, a fixed-rate loan, not an equity share, repaid at the project’s exit. It’s commonly used to bridge the gap between what a senior lender will fund and the total cost of the scheme, letting you take on a larger project without needing to find the entire remaining equity yourself.
What should first-time developers know specifically?
Only a portion of the wider development finance market, commonly cited as around 30-40 out of over 100 active UK lenders, will consider a first-time developer at all. Permitted development conversions carry lower risk than ground-up schemes for a first attempt, so if you’re genuinely new to development, starting with a smaller, more contained ground-up project, ideally alongside an experienced contractor and project manager, tends to produce a considerably smoother first experience than an ambitious, complex scheme.
The bottom line
Ground-up development finance carries the most construction risk of any property finance category, since there’s no existing structure to lean on, and lenders price and structure it accordingly, staged drawdowns, dual LTC and LTGDV caps, and a genuine premium for first-time developers without a delivered track record. For larger schemes, JV equity or mezzanine finance can extend what’s achievable beyond a single senior development loan, worth discussing early rather than assuming one facility needs to cover the entire capital stack alone.
