Transaction Type

Ground Up Development Financing with Private Credit

Phased drawdown facilities for residential, commercial, and mixed-use ground up schemes. From site acquisition through to practical completion, structured around your build programme and GDV.

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What Is Ground Up Development Financing via Private Credit?

Ground up development financing through private credit refers to debt capital provided by non-bank lenders - including specialist development credit funds, family offices, and institutional investors - to fund the construction of new buildings from vacant or cleared land through to practical completion. Unlike traditional bank development lending, which has become increasingly constrained by regulatory capital requirements and conservative loan-to-cost ceilings, private credit development financing offers higher leverage, faster execution, and structural flexibility tailored to the specific risk profile of each scheme.

The core mechanic of ground up development finance is the phased drawdown facility. Rather than funding the entire loan quantum on day one, the lender commits to a total facility size but releases funds in tranches aligned with construction milestones. A typical drawdown profile begins with a land acquisition tranche (funded at completion of site purchase), followed by monthly or milestone-based construction drawdowns verified by an independent monitoring surveyor (MS) or quantity surveyor (QS). This staged approach protects the lender by ensuring that funds are only released against verified work-in-progress, while giving the developer certainty of capital throughout the build programme.

Private credit has carved out a significant position in the UK and European development finance market. The retreat of mainstream banks from higher-leverage and more complex development schemes - driven by Basel III/IV risk-weighting on construction exposures, internal concentration limits, and post-GFC institutional caution - has created persistent supply gaps that private credit lenders have filled. These lenders operate without the same regulatory capital constraints as banks, allowing them to underwrite schemes at higher loan-to-cost (LTC) and loan-to-GDV ratios, accept sites with more complex planning positions, and accommodate first-time or less experienced developers where the underlying scheme economics are sound.

The structures available span from straightforward senior development loans at 60-70% LTC through to stretch senior facilities reaching 75-80% LTC, and whole-loan or combined senior-plus-mezzanine structures that can take total leverage to 85-90% LTC. At the higher leverage points, lenders will typically require pre-sales, forward commitments, or other forms of revenue de-risking before reaching full commitment. The cost of capital increases with leverage, but for developers whose alternative is to accept fewer or smaller schemes due to equity constraints, the blended cost of the higher-leverage structure is often justified by the return on equity improvement it delivers.

When to Use This Structure

Ground up development financing through private credit is the right solution when the scheme profile, developer requirements, or timeline falls outside the comfort zone of traditional bank development lending. The following scenarios are where private credit consistently delivers outcomes that bank lenders cannot match.

Schemes requiring leverage above 65% LTC - where bank regulatory constraints and internal risk appetite cap lending below the developer`s requirements, and additional equity would dilute returns to unacceptable levels

Compressed pre-construction timelines where planning permission has been granted and the developer needs to start on site quickly - private credit lenders can issue committed term sheets in 2-4 weeks versus 8-16 weeks for mainstream bank development facilities

Complex or phased schemes involving multiple buildings, mixed-use elements (residential plus commercial plus affordable), or infrastructure works that require bespoke drawdown mechanics beyond standard bank templates

Sites with residual planning risk such as reserved matters, conditions discharge, or section 106 negotiations still in progress - where banks will not commit until all planning conditions are fully satisfied

First-time or less experienced developers with strong scheme economics but insufficient track record to satisfy mainstream bank lending criteria - private credit lenders focus more on the scheme fundamentals and professional team than purely on developer CV

Development exit situations where the scheme is nearing practical completion and the developer needs to refinance the construction facility before unit sales are complete - bridging the gap between build completion and full sell-down

Schemes in secondary or tertiary locations where bank appetite is limited by postcode-level concentration policies, but where the underlying supply-demand dynamics and comparable evidence support the GDV assumptions

Joint venture or profit-share structures where the capital provider takes an equity-like return alongside the debt, reducing the headline interest rate in exchange for participation in development profit above a hurdle

How It Works

The ground up development financing process through private credit follows a structured path from initial scheme appraisal to final drawdown and repayment. The typical timeline from initial approach to first drawdown runs 4-8 weeks, with the facility then drawing down over the construction period (typically 12-24 months for residential schemes).

Scheme Appraisal and Lender Selection

The process begins with the developer or their adviser (such as Revelle Capital) preparing a detailed scheme appraisal covering the site, planning position, proposed development, construction programme, cost plan, GDV assumptions, and developer track record. This is shared with a shortlisted group of 3-8 private credit development lenders selected based on their appetite for the specific scheme type, location, ticket size, and leverage requirement. Lender selection is critical - approaching lenders whose mandates do not fit the scheme profile wastes time and creates unnecessary information leakage.

Indicative Terms and Heads of Terms

Selected lenders review the scheme appraisal, visit the site (or review virtually for initial assessment), and submit indicative terms within 1-2 weeks. These cover proposed facility size, LTC and LTGDV ratios, interest rate, arrangement fees, drawdown mechanics, pre-sale requirements, and key conditions. We benchmark proposals across multiple lenders, negotiate pricing and structure, and recommend the optimal lender based on total cost of capital, flexibility, speed, and certainty. Once a preferred lender is selected, formal Heads of Terms are agreed and signed.

Valuation and Professional Appointments

The lender instructs an independent RICS-registered valuer to prepare a development appraisal and Red Book valuation covering the site value, construction costs, professional fees, and residual land value. Simultaneously, the lender appoints (or approves the developer`s appointment of) an independent monitoring surveyor (MS) who will verify construction progress and authorise drawdowns throughout the build. The MS reviews the cost plan, build programme, and contractor credentials. Legal due diligence on the site title, planning permissions, and development agreement is conducted in parallel.

Credit Approval and Facility Agreement

With valuation and professional reports complete, the lender takes the scheme through its credit committee. For established private credit development platforms, approval typically takes 1-2 weeks. The output is a formal credit-approved facility offer. Legal documentation is then prepared - typically a facilities agreement, debenture (fixed and floating charge over the development site and borrower assets), a drawdown mechanism linked to MS certifications, and ancillary documents including assignments of professional appointments, building contracts, and insurance. Documentation for private credit development loans is generally simpler than bank equivalents, reflecting the single-lender dynamic.

Initial Drawdown and Site Acquisition

With documentation signed and conditions precedent satisfied (including KYC/AML clearance, insurance confirmation, building contract execution, and planning confirmation), the first drawdown funds the site acquisition or reimburses the developer for site costs already incurred. The developer`s equity contribution is typically required at this stage, either as cash equity injected into the borrower SPV or as the site value itself where the developer already owns the land.

Construction Drawdowns and Monitoring

Throughout the build programme, the developer submits monthly drawdown requests supported by contractor valuations and progress photographs. The independent monitoring surveyor visits the site (typically monthly), verifies the work completed against the cost plan and programme, confirms the drawdown amount, and issues a certificate to the lender authorising release of funds. This process continues until the facility is fully drawn. The MS also flags any cost overruns, programme delays, or quality issues to the lender, providing an independent view of scheme progress alongside the developer`s own reporting.

Practical Completion, Sales, and Repayment

Upon practical completion, the facility typically converts from a construction loan to a short-term investment or sales period loan. Unit sales proceeds are applied to reduce the outstanding facility balance, with the lender holding a charge over each unit until it is sold. Some facilities include a longstop repayment date 3-6 months after practical completion, by which point the developer must have sold sufficient units to repay the loan or refinance the remaining balance. For build-to-rent or commercial schemes, the exit is typically a refinancing onto a permanent investment facility once the asset is stabilised and income-producing.

Typical Terms

The terms available for ground up development financing through private credit vary by scheme type, developer experience, location, and market conditions. The ranges below reflect current UK and European market conditions as of early 2026.

Senior LTCMainstream senior development lending from private credit; higher end for experienced developers with pre-sales	60-70% of total development costs
Stretch Senior LTCSingle-tranche facilities blending senior and junior risk; pricing reflects the higher leverage	70-80% of total costs
Total LTC (with Mezzanine)Combined senior plus mezzanine structures; developer equity requirement reduced to 10-20% of costs	80-90% of total costs
LTGDVLoan-to-GDV is the binding constraint on many schemes; higher ratios for schemes with pre-sales or forward commitments	55-70% of gross development value
Senior PricingInterest typically rolls up and compounds monthly; no cash service during construction. Some lenders offer day-one deductions.	8-12% p.a. (rolled up)
Mezzanine PricingReflects subordinated risk; some mezzanine lenders also take a profit share in lieu of higher headline rate	14-20% p.a. (rolled up)
Arrangement FeeTypically deducted from the first drawdown; higher for smaller or more complex schemes	1.5-2.5% of total facility
Exit FeePayable on repayment; not all lenders charge exit fees - this is a negotiation point	0.5-1.5% of total facility
Monitoring Surveyor FeeMonthly site visits; cost borne by the developer and typically added to the facility	GBP 1,500-3,000 per visit
Facility TermAligned to build programme plus sales period; extensions typically at increased margin	12-24 months (plus 3-6 month extension)
Minimum Scheme SizeSmaller schemes attract higher proportional fees; most active market is GBP 5-50M total facility	GBP 1M - 5M (lender dependent)
Developer EquityCan include land value, cash equity, or profit share arrangements; lower equity with mezzanine layer	10-40% of total costs
Pre-Sale RequirementsSome lenders require no pre-sales; others require 20-30% exchanged before first construction drawdown	0-30% of units (lender dependent)

Senior LTC

60-70% of total development costs

Mainstream senior development lending from private credit; higher end for experienced developers with pre-sales

Stretch Senior LTC

70-80% of total costs

Single-tranche facilities blending senior and junior risk; pricing reflects the higher leverage

Total LTC (with Mezzanine)

80-90% of total costs

Combined senior plus mezzanine structures; developer equity requirement reduced to 10-20% of costs

LTGDV

55-70% of gross development value

Loan-to-GDV is the binding constraint on many schemes; higher ratios for schemes with pre-sales or forward commitments

Senior Pricing

8-12% p.a. (rolled up)

Interest typically rolls up and compounds monthly; no cash service during construction. Some lenders offer day-one deductions.

Mezzanine Pricing

14-20% p.a. (rolled up)

Reflects subordinated risk; some mezzanine lenders also take a profit share in lieu of higher headline rate

Arrangement Fee

1.5-2.5% of total facility

Typically deducted from the first drawdown; higher for smaller or more complex schemes

Exit Fee

0.5-1.5% of total facility

Payable on repayment; not all lenders charge exit fees - this is a negotiation point

Monitoring Surveyor Fee

GBP 1,500-3,000 per visit

Monthly site visits; cost borne by the developer and typically added to the facility

Facility Term

12-24 months (plus 3-6 month extension)

Aligned to build programme plus sales period; extensions typically at increased margin

Minimum Scheme Size

GBP 1M - 5M (lender dependent)

Smaller schemes attract higher proportional fees; most active market is GBP 5-50M total facility

Developer Equity

10-40% of total costs

Can include land value, cash equity, or profit share arrangements; lower equity with mezzanine layer

Pre-Sale Requirements

0-30% of units (lender dependent)

Some lenders require no pre-sales; others require 20-30% exchanged before first construction drawdown

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Private Credit vs Bank Lending

The choice between private credit and traditional bank lending for ground up development financing involves trade-offs across leverage, speed, cost, and structural flexibility. The comparison below highlights the key differences developers should evaluate.

Attribute	Private Credit	Bank Lending
Maximum Leverage	Up to 90% LTC with combined senior and mezzanine structures. Stretch senior can reach 75-80% from a single lender. Developer equity requirement as low as 10%.	Typically capped at 60-65% LTC. Most banks will not exceed 65% LTGDV. Developer equity requirement of 35-40% minimum.
Execution Speed	4-8 weeks from initial approach to first drawdown. Single credit committee. No syndication or internal committee chains beyond the fund`s own IC.	8-16 weeks is typical. Multiple committee stages, internal risk reviews, and panel valuer appointment processes add time. Larger schemes can take 4-6 months.
Developer Experience Requirements	Flexible on track record. Will lend to first-time developers with strong professional teams, experienced contractors, and sound scheme economics. Focus on the deal, not just the CV.	Strict track record requirements. Most banks require evidence of 3+ completed schemes of similar scale. First-time developers typically excluded from bank development lending.
Planning Position	Can lend against detailed planning with reserved matters outstanding, or with conditions still being discharged. Some lenders will fund pre-planning at land loan rates.	Typically requires full, unconditional planning permission with all conditions discharged before drawdown. Limited appetite for any residual planning risk.
Location Appetite	Broader geographic appetite including secondary and tertiary locations. Decisions based on scheme-specific comparable evidence and local demand-supply dynamics.	Concentrated in prime and strong secondary locations. Postcode-level exclusion policies and concentration limits restrict appetite in many areas.
Structural Flexibility	Bespoke drawdown mechanics, phased schemes, mixed-use structures, and cross-collateralisation across multiple sites. Tailored to each scheme`s specific requirements.	Standardised facility structures. Less flexibility on drawdown mechanics, mixed-use allocation, and cross-collateral arrangements. Template-driven documentation.
Cost of Capital	Higher headline rates: 8-12% for senior, 14-20% for mezzanine. Arrangement fees of 1.5-2.5%. Reflects the speed, leverage, and flexibility premium.	Lower headline rates: 5-8% for senior. Lower arrangement fees. However, lower leverage means more equity required, which has its own opportunity cost.
Ongoing Relationship	Direct relationship with a single decision-maker. Drawdown approvals and variation requests handled quickly. MS certification process is efficient and predictable.	Relationship manager may not be the decision-maker. Internal approvals for drawdown variations, cost overrun facilities, or programme changes can be slow and bureaucratic.

Private CreditvsBank Lending

Maximum Leverage

Private CreditUp to 90% LTC with combined senior and mezzanine structures. Stretch senior can reach 75-80% from a single lender. Developer equity requirement as low as 10%.

Bank LendingTypically capped at 60-65% LTC. Most banks will not exceed 65% LTGDV. Developer equity requirement of 35-40% minimum.

Execution Speed

Private Credit4-8 weeks from initial approach to first drawdown. Single credit committee. No syndication or internal committee chains beyond the fund`s own IC.

Bank Lending8-16 weeks is typical. Multiple committee stages, internal risk reviews, and panel valuer appointment processes add time. Larger schemes can take 4-6 months.

Developer Experience Requirements

Private CreditFlexible on track record. Will lend to first-time developers with strong professional teams, experienced contractors, and sound scheme economics. Focus on the deal, not just the CV.

Bank LendingStrict track record requirements. Most banks require evidence of 3+ completed schemes of similar scale. First-time developers typically excluded from bank development lending.

Planning Position

Private CreditCan lend against detailed planning with reserved matters outstanding, or with conditions still being discharged. Some lenders will fund pre-planning at land loan rates.

Bank LendingTypically requires full, unconditional planning permission with all conditions discharged before drawdown. Limited appetite for any residual planning risk.

Location Appetite

Private CreditBroader geographic appetite including secondary and tertiary locations. Decisions based on scheme-specific comparable evidence and local demand-supply dynamics.

Bank LendingConcentrated in prime and strong secondary locations. Postcode-level exclusion policies and concentration limits restrict appetite in many areas.

Structural Flexibility

Private CreditBespoke drawdown mechanics, phased schemes, mixed-use structures, and cross-collateralisation across multiple sites. Tailored to each scheme`s specific requirements.

Bank LendingStandardised facility structures. Less flexibility on drawdown mechanics, mixed-use allocation, and cross-collateral arrangements. Template-driven documentation.

Cost of Capital

Private CreditHigher headline rates: 8-12% for senior, 14-20% for mezzanine. Arrangement fees of 1.5-2.5%. Reflects the speed, leverage, and flexibility premium.

Bank LendingLower headline rates: 5-8% for senior. Lower arrangement fees. However, lower leverage means more equity required, which has its own opportunity cost.

Ongoing Relationship

Private CreditDirect relationship with a single decision-maker. Drawdown approvals and variation requests handled quickly. MS certification process is efficient and predictable.

Bank LendingRelationship manager may not be the decision-maker. Internal approvals for drawdown variations, cost overrun facilities, or programme changes can be slow and bureaucratic.

Who Provides Ground Up Development Financing Through Private Credit?

The UK and European private credit market for ground up development financing is served by several distinct categories of lender, each with different return profiles, risk appetites, and structural capabilities. Understanding the landscape helps developers target the right capital source for their specific scheme.

Specialist Development Credit Funds - Dedicated development finance funds represent the most active private credit providers in the ground up space. These managers operate funds specifically mandated to provide construction-phase lending, with in-house development expertise including former surveyors, project managers, and developers on their credit teams. They typically target net returns of 8-12% on senior facilities and can underwrite single-scheme exposures of GBP 5-100M+. Their development-specific expertise means faster credit decisions and more pragmatic approaches to construction risk management.

Multi-Strategy Real Estate Debt Funds - Several larger real estate credit platforms operate across the full spectrum of property debt, from stabilised investment lending through to development finance. These managers benefit from scale and diversification, allowing them to hold larger single-name exposures and offer more competitive pricing on prime schemes. They typically focus on larger developments (GBP 20M+ facility) in established locations with experienced developer sponsors.

Family Offices and Private Capital - At the smaller end of the market (GBP 1-10M facilities), family offices and private wealth vehicles are active providers of development finance. These lenders often have real estate backgrounds themselves, giving them practical understanding of construction risk. Their advantages include speed of decision-making and flexibility on structure, though their capital base limits individual scheme capacity. Some family offices co-invest equity alongside their debt position, creating aligned-interest structures that can reduce the headline cost of debt.

Insurance Company Real Estate Lending Arms - Several UK and European insurance groups have established or acquired real estate lending platforms that include development finance capabilities. Insurance capital tends to favour larger, lower-risk schemes (prime locations, experienced developers, strong pre-sales) and can offer pricing advantages due to their lower cost of capital. However, their credit processes tend to be slower and less flexible than fund-based lenders.

Mezzanine and Preferred Equity Specialists - For developers seeking to minimise their equity contribution, specialist mezzanine lenders fill the gap between the senior facility and the developer`s own equity. These providers typically lend from 65% to 85-90% LTC, subordinated to the senior lender via an intercreditor agreement. Pricing reflects the subordinated risk at 14-20% p.a. Some mezzanine providers prefer profit-share structures where they take a percentage of development profit (typically 30-50%) in exchange for a lower or zero headline interest rate, aligning their return with the developer`s own outcome.

Peer-to-Peer and Crowdfunding Platforms - A growing segment of the market uses technology platforms to aggregate capital from multiple individual and institutional investors for development lending. These platforms can offer competitive pricing on straightforward schemes (sub-GBP 10M, experienced developers, strong locations) and provide fast execution through automated credit processes. However, their ability to manage complex schemes, cost overruns, or distressed situations is less proven than established credit fund managers.

Deal Reference: Mixed-Use Residential and Commercial Development, South East England

Anonymised reference based on comparable transactions seen on the market.

SectorResidential Development

Deal SizeGBP 28M stretch senior facility (78% LTC)

Leverage78% LTC on total development costs of GBP 35.9M. 62% LTGDV against an independent valuation of GBP 45.2M gross development value.

Tenor18-month facility with automatic 3-month extension at SONIA + 100 bps over the initial rate, available subject to practical completion being achieved and minimum 30% of units sold or exchanged.

StructureStretch senior facility covering land acquisition (GBP 8.2M) and construction costs (GBP 19.8M) for a 62-unit residential scheme with 4,500 sq ft of ground-floor commercial space. Drawdown structured in monthly tranches certified by independent monitoring surveyor. Interest rolled up at 9.75% p.a. with no cash service during construction. Arrangement fee of 2.0% deducted from initial drawdown. No pre-sale requirement at outset, with a soft pre-sale covenant of 20% exchanged by the time 50% of the facility was drawn. Developer equity of GBP 7.9M (22% of total costs) comprising land value and cash top-up.

OutcomeThe facility was fully drawn over 16 months against programme. Practical completion was achieved on schedule. By the end of the 18-month initial term, 38 of 62 units had exchanged (61%), generating GBP 27.8M in sales proceeds that reduced the outstanding facility to GBP 8.4M. The commercial space was let to two tenants during the final quarter of construction. The remaining 24 residential units and the let commercial investment were refinanced onto a 12-month development exit facility at 65% LTV, allowing the developer to repay the construction lender in full and manage the sell-down at an optimal pace. Total development profit of GBP 6.1M represented a 77% return on the developer`s GBP 7.9M equity, compared to approximately 35% ROE had the developer used a bank facility at 60% LTC and contributed the additional GBP 6.5M from their own capital.

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Frequently Asked Questions

Common questions about this transaction structure

Private credit lenders can provide ground up development finance at up to 85-90% of total development costs through combined senior and mezzanine structures. A senior facility typically covers 60-70% LTC, with a mezzanine layer adding a further 15-20% of costs. Stretch senior facilities from a single lender can reach 75-80% LTC without a separate mezzanine provider. The binding constraint is usually the loan-to-GDV ratio, which most lenders cap at 65-70%. Developer equity of 10-20% of total costs is required at the higher leverage points. Achieving maximum leverage typically requires an experienced developer, a strong location, favourable planning, a fixed-price building contract, and in some cases pre-sales or forward commitments on a portion of the units.

Yes, private credit lenders are generally more flexible on developer experience than mainstream banks. While banks typically require evidence of 3+ completed schemes of similar scale, private credit lenders evaluate the overall risk profile of the scheme holistically. A first-time developer with a strong professional team (experienced project manager, reputable main contractor, qualified architect, and competent employer`s agent) can access development finance from private credit sources. The lender may require a slightly higher equity contribution, an experienced development manager or mentor on the team, and closer monitoring surveyor oversight. The scheme itself needs to be straightforward - a first development is not the time for a complex phased mixed-use scheme. Pricing may also carry a modest premium to reflect the developer`s learning curve.

Ground up development finance operates on a phased drawdown basis. The initial drawdown typically covers site acquisition costs (or reimburses the developer for land already purchased). Subsequent drawdowns are released monthly or at agreed construction milestones. Each drawdown request is submitted by the developer with supporting contractor valuations and is verified by an independent monitoring surveyor appointed by the lender. The MS visits the site, confirms the work completed matches the drawdown request, checks progress against the agreed cost plan and programme, and issues a certificate authorising the lender to release funds. Drawdowns are made net of any retentions (typically 2.5-5% of each payment). This staged process protects the lender by ensuring funds are only released against verified work, and protects the developer by providing certainty that committed funds will be available as the build progresses.

Cost overruns and programme delays are managed through the monitoring surveyor process. The MS identifies potential overruns early through their monthly reviews and flags them to both the lender and developer. For minor overruns (typically up to 5-10% of remaining costs), the developer is usually required to inject additional equity to cover the shortfall. For larger overruns, the lender may agree to increase the facility if the scheme still demonstrates sufficient profit margin and the LTGDV covenant is maintained. Programme delays primarily affect the interest roll-up - a longer build period means more accrued interest, which reduces the developer`s profit margin. Most facilities include contingency allowances of 5-10% in the cost plan, and interest reserves calculated on a programme plus 3-6 months. If delays or cost increases threaten the scheme`s viability, the lender and developer work together to find solutions - which may include value engineering, phasing adjustments, or in more serious cases, bringing in a replacement contractor.

Development exit finance is a refinancing facility used when a ground up scheme reaches practical completion but not all units have been sold. The construction lender`s facility typically has a longstop maturity date 3-6 months after practical completion, by which point the developer must repay the loan. If unit sales are still in progress, a development exit facility replaces the construction loan with a lower-cost, longer-term facility (typically 12-18 months) secured against the completed but unsold units. Development exit pricing is lower than construction finance (typically 6-9% p.a.) because the construction risk has been eliminated - the lender is lending against completed, habitable units with individual valuations. This facility gives the developer time to sell remaining units at optimal prices rather than being forced into distressed sales to meet the construction lender`s maturity date.

While both are forms of short-term property lending, ground up development finance and bridging finance serve fundamentally different purposes. Bridging finance is a short-term loan (typically 3-18 months) secured against an existing property, used to fund acquisition, refurbishment, or to bridge a timing gap. It is based on the current or light-refurbishment value of an existing asset. Ground up development finance funds the construction of new buildings from the ground up, with phased drawdowns over a longer period (12-24 months), independent monitoring surveyor oversight, and lending based on gross development value rather than existing asset value. The risk profiles are different: bridging lenders are exposed primarily to property market risk on an existing asset, while development lenders take construction risk (build cost, programme, contractor performance) in addition to market risk. Development finance typically requires more extensive due diligence, professional team scrutiny, and ongoing monitoring than bridging, reflecting the additional complexity of the construction process.

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