Sourcing a site is only half the job. The other half is getting a lender comfortable with the numbers - and that's often where deals stall, with underwriters chasing figures the developer already has, just not in a format credit teams can move on quickly.
In a recent session with Andrew Fraser, Chief Commercial Officer at Assetz Capital, we walked through exactly how an agile lender's credit team assesses a development deal, from first read to term sheet. Here's the framework, plus a worked example based on real underwriting terms.
What is property development finance?
Property development finance is short-term lending used to fund the construction or conversion costs of a property project, repaid on sale or refinance once the scheme completes. Unlike a standard mortgage, it's assessed against the project's viability - the numbers behind the build - rather than solely the borrower's income.
How do underwriters assess a development deal?
Credit teams work through three main areas when reviewing a deal:
- Capability and logistics - physical site access, local comparables, and realistic build timelines. Brownfield regeneration sites are frequently viewed favourably, since essential services and utilities are typically already in place.
- Commercial viability - the profit-on-cost ratio acts as a safety barometer, showing how much margin a project has to absorb shocks like material cost overruns, construction delays, or finance fee inflation. A ratio between 15% and 20% is considered standard and healthy; 10% marks the underwriting floor for a standard sales-exit project.
- Borrower profile - beyond the site itself, credit teams look at a developer's track record, asset liquidity, and cash reserves, to gauge how they'd handle the unexpected.
Development finance case study: a Swindon regeneration project
To see these principles applied, take a brownfield commercial-to-residential scheme in central Swindon: planning permission for 12 residential apartments built above 2 ground-floor commercial shell units.
The valuation stack:
Subtracting build costs, professional fees, finance costs, and the land purchase price leaves a developer profit of roughly £500,000 — a 20.8% profit-on-cost ratio, comfortably above the underwriting floor.
Indicative funding terms for a scheme like this:
Specialist development finance structures worth knowing
- Planning gain as cash equity - as Andrew Fraser puts it: "We can consider planning gain as a full pound-for-pound cash contribution. If they pay £200,000 for it and it's worth £500,000, we'll view the £300,000 planning uplift as real cash." Some lenders will credit proven land value uplift directly as hard equity toward the deal.
- High gearing thresholds - top-tier development facilities can stretch to 72% Loan-to-GDV and up to 95% Loan-to-Cost.
- Permitted Development Right (PDR) bridging - for commercial-to-residential conversions (vacant offices into student housing or apartments, for example), specialist bridging loans are available up to 65% of the initial purchase price.
- First-time developer routes - credit teams inspect track record closely, but first-time developers can still access major development loans when backed by an experienced principal contractor or a qualified project management team.
Where land data speeds up underwriting
Clean, accurate site data - ownership, planning history, environmental constraints - gives credit teams what they need to run a commercial sense-check quickly, rather than requesting it piecemeal from the developer mid-review.
This is where Searchland fits in. Ownership boundaries, planning history, flood zones, and Biodiversity Net Gain parameters all sit on one platform, refreshed every 24 hours - so a broker or developer can pull an accurate site pack before a deal ever reaches a credit team, instead of chasing council registries and title documents separately once underwriting has already started. Fewer information requests mid-review means fewer delays between term sheet and completion.
From site data to term sheet, faster
Searchland's live land and planning data gives credit teams like Assetz Capital exactly what they need to assess a deal quickly - and Assetz Capital brings the flexible development finance to fund it once the numbers stack up.
