Development Finance Legal Services
Development Finance Solicitors
At Attwells Solicitors, we understand that development finance is one of the more complex areas of property finance. Whether you’re a landowner, property developer, or investor planning a new build or major renovation, you need a solicitor who can review and negotiate your loan terms, protect your interests, and ensure your project stays on track.
What Is Development Finance?
Development finance is a form of short-term funding designed to help property professionals acquire, build, or refurbish property. It can be used for a wide range of purposes, including the purchase of land, covering construction or renovation costs, and managing unexpected expenses. In many cases, development finance also helps to bridge gaps between cashflow and the lender’s requirements.
Unlike traditional mortgages, development finance is usually released in stages, known as tranches, which are tied to the progress of the build. The amount a lender is willing to advance is often calculated against the Gross Development Value (GDV), which represents the expected value of the project once it is complete. Because of the higher risks involved, the documentation is more detailed and robust legal oversight is essential.
How long does development finance take?
The time it takes to arrange development finance will vary depending on the lender and the complexity of your project. In most cases, you can expect to receive an agreement in principle within one to two weeks. This gives you an early indication that funding is available based on your plans, costs, and experience.
The full legal process and due diligence usually takes longer. On average, this stage requires six to eight weeks to complete. During this time, your solicitor will carry out title checks, review planning permissions, and negotiate the loan and security documents. They will also ensure that all of the lender’s conditions are met before funds are released.
Once the loan is in place, money is typically drawn down in stages as your construction progresses. Each draw-down is subject to certain conditions, such as inspections or certificates being provided, and generally takes a few days to a week to process.
Overall, most development finance arrangements take around two months from the first application to completion. However, larger or more complex projects can take longer, particularly where there are planning issues, joint venture structures, or unusual lender requirements.
Types of Development Finance
There are several types of development finance, each designed to support a different stage of the project.
Land purchase and site acquisition is often the first step in any development. This involves detailed legal due diligence on matters such as land titles, planning permissions, covenants, and environmental considerations.
Construction and renovation loans provide funding during the building phase. These loans are typically released in stage payments, and it is vital to ensure compliance with lender requirements at every stage.
Refinancing and exit finance becomes necessary when an initial bridging loan or development facility needs to be repaid. Many clients choose to move into a longer-term mortgage or release equity once the project is complete.
Joint ventures, promotion agreements, and option agreements are increasingly common in property development. These arrangements allow developers, landowners, and promoters to share risk and reward, but they require careful legal drafting to protect all parties.
Finally, some projects make use of hybrid finance structures. These may combine commercial loans with grant funding, mezzanine finance, or private investment. Blended structures can be highly effective, but they also create additional layers of complexity that require expert legal support.
Frequently Asked Questions About Development Finance
What documents will the lender require?
You’ll generally need title deeds (or proof of title), planning permission documentation, building regulation compliance, detailed cost plans, proof of funds, and sometimes environmental or flood risk reports. We’ll help you identify everything and ensure it complies with the lender’s checklist.
What are the lender’s “step-in rights”?
These are contractual rights that permit the lender to take control of, or complete, the project if you fail to meet obligations (e.g. you default or fail to follow the approved plan). We’ll negotiate the wording and the triggers to limit risks to you.
How are funds released (draw-downs)?
Development loans are generally paid in stages: land purchase, initial construction, further construction stages, final complete phase. Each draw usually requires certain conditions to be met: inspections, certifications, budget checks. Our job is to ensure those conditions are clearly defined and manageable.
What are common risks with development finance?
Risks include unanticipated cost overruns, delays in planning or construction, lender over-monitoring, high interest rates or fees, unsatisfactory security documents, or difficulty with exit financing. Good legal review helps mitigate many of these.
How much do legal costs usually run?
Legal fees depend on project size, complexity, and whether corporate structures are involved. We’ll provide a fixed quote based on the information you supply, and estimates for additional costs (searches, registrations etc.).
Are there bridge financing options for development?
Yes — sometimes you may need bridging finance to acquire site or cover early costs before development finance kicks in. We can assist with mixed or hybrid finance structures, ensuring seamless transitions between funding types.
How do I plan exit financing?
Exit financing refers to what happens after the development is complete — either selling, refinancing into a long-term mortgage, or securing refinance funding. We’ll help you ensure lender requirements for exit are realistic, and the legal groundwork is laid from early on.
How do changes in planning or scope affect the loan?
Any changes to scope, building plans, or timeline often require lender’s consent. These changes may affect value, risk, or legal permissions. We advise on how to manage such changes, get approvals, and revise loan docs as needed.
Will leasehold issues affect development finance?
Yes. If your site or property is leasehold (or has leasehold elements), obligations or restrictions in the head lease may impose limitations. You may need landlord consent, restrictions on assignment, or obligations for works. Our team will review all that and advise.
How do interest rates and finance costs work?
Development loans tend to carry higher interest rates and fees compared with standard mortgages due to higher risk. There can be upfront fees, arrangement fees, valuation costs, monitoring costs, legal fees, and sometimes exit penalties. Knowing what’s included vs what’s extra is important — we help with that clarity.
