Development Finance in Cardiff

We arrange development finance for the full spectrum of Cardiff projects: ground-up residential schemes from single houses to multi-unit developments, commercial new builds including office space and commercial units premises, mixed-use developments combining commercial and residential elements, and conversion projects. Cardiff's planning authority has shown support for quality development that contributes to the city's growth objectives, and the local market's end values support viable appraisals across diverse project types.

Development finance lenders typically require a minimum profit on cost of 20% to 25% for Cardiff schemes, equating to approximately 15% to 20% profit on gross development value. Given Cardiff's average property values of £254 per square foot and 9.1% price growth over five years, many schemes comfortably achieve these thresholds. Lenders stress-test by increasing costs by 5% to 10% and reducing values by a similar margin — the scheme must remain viable under these stressed assumptions to proceed.

Experienced developers with a track record of comparable completed schemes access the best terms — typically up to 85% to 90% of costs at rates from 0.65% per month. First-time developers can secure development finance for Cardiff projects but may face lower leverage of 55% to 65% of costs and requirements to appoint a project monitor. The key is demonstrating relevant transferable skills, a competent professional team, and a robust appraisal that withstands scrutiny. We regularly help first-time developers in Cardiff structure their proposals to meet lender requirements.

Development finance is released in stages aligned with your construction programme. The initial advance — typically on completion of the land purchase — covers the site acquisition and sometimes initial professional fees. Subsequent drawdowns are released as construction milestones are achieved: foundations, superstructure, wind and watertight, first fix, second fix, and practical completion. Before each drawdown, a monitoring surveyor appointed by the lender visits the site to verify that the claimed works have been completed satisfactorily and that the remaining budget is sufficient to finish the project. Once the monitoring surveyor's report is approved, the funds are released — typically within 3 to 5 working days. This staged mechanism ensures capital flows match the actual progress of the build.

Development finance costs fall into several categories. Interest is charged on drawn funds only — not the full facility — and is typically rolled up (added to the loan) and repaid at the end of the project from sales or refinance proceeds. Expect rates from 0.65% to 1.15% per month. An arrangement fee of 1.5% to 2% of the total facility is charged on completion. A monitoring surveyor is appointed at a cost of £750 to £1,500 per inspection, with inspections occurring at each drawdown stage. A valuation and development appraisal fee of £2,500 to £7,500+ covers the initial property and scheme assessment. Lender legal costs of £3,000 to £8,000+ cover the legal work on the facility. Some lenders also charge an exit fee of 1% to 1.5%. Your own professional costs — solicitor, QS cost plan, and broker fee — are additional.

Stretched senior finance is a single development loan facility that provides higher leverage than standard senior lending — typically up to 85% to 90% of total project costs and up to 75% of GDV. It effectively combines what would traditionally be separate senior and mezzanine facilities into one loan, simplifying the capital stack and often reducing the overall cost of finance. Stretched senior is available to experienced developers with proven track records, typically requiring completion of at least 3 to 5 comparable projects. The advantages include dealing with a single lender, lower total arrangement fees than dual facilities, simplified legal documentation, and often a competitive blended interest rate. The minimum project size and profit margin requirements are typically higher than for standard senior lending.