For a developer that has successfully refurbished and sold (flipped) ten terraced houses and now wants to buy a plot of land and build two new houses, lenders still classify as new developers because ground-up build risks are different from refurbishment risks.
You have been the Main Contractor building houses for other people for 20 years. You know how to build, but you’ve never been the “Borrower” or the “Developer” on paper. You need a lender who respects your construction skills as a substitute for development track record.
Expect a maximum of 60% to 65% LTGDV when applying as a first-time developer. You will likely need a larger cash deposit (often 30-40% of costs) to demonstrate you have “skin in the game.”
This is non-negotiable. You must employ a reputable main contractor (you cannot usually build it yourself on a DIY basis for the first one) and an independent project manager to oversee the build.
Personal Guarantees (PGs) will be mandatory. The lender needs to know you are personally committed to finishing the project if things get tough.
Lenders will insist on a higher contingency (e.g., 10-15% of build costs) to cover the “unknowns” that inexperienced developers often miss.
We help you draft a developer CV. Even if you haven’t built a house, we highlight transferable skills – project management, existing portfolio management, or construction industry experience. We show the lender why you are a safe pair of hands.
We advise you on who to hire. If you appoint a Quantity Surveyor (QS) and a contractor who are well-known to the lender, it significantly increases your chances of approval. We can introduce you to professionals who have the credibility you might lack.
If the loan is still declined, we can pair you with experienced JV Partners or equity funders. They provide the track record and some capital in exchange for a profit share, allowing you to get that crucial first project under your belt.
This is difficult but possible. If you run a construction company, some lenders will allow it, provided you have a fixed-price JCT contract in place and an independent quantity surveyor to sign off the invoices. However, most lenders prefer an arms-length contractor for the first deal to ensure transparency.
Usually, once you have successfully completed and exited (sold or refinanced) one or two similar schemes, you graduate to standard rates and higher leverage. The first one is always the hardest and most expensive but it gets easier from there.
Yes, typically. You should budget for a higher rate (e.g., 10-12% p.a.) because the lender is pricing in the lack of track record. View this cost as an investment in your career. Once you have the first completion certificate, your next loan will be cheaper.