Residential development finance, sized on GDV.
Ground up housing, apartment schemes and conversions from £500k to £100m. Funded against gross development value with staged drawdowns, monitored as the build progresses. What the leverage means in practice, and the two numbers that actually decide your facility.
By Dominic Whitecross, Co-Founder, HyLend. Last reviewed July 2026.
How a residential facility is sized
Two caps apply and whichever bites first sets your facility. LTGDV caps the loan at a percentage of gross development value, typically up to 70%. LTC caps it at a percentage of total project cost, land plus build plus fees, typically up to 85%. The remainder is your equity, and land already owned at an uplifted value with planning can count towards it.
On most residential schemes LTC binds before LTGDV. That surprises borrowers who have built their appraisal around end value, and it is worth establishing which cap is binding before you plan your cash requirement.
What lenders look at on a residential scheme
The sales evidence. Residential GDV rests on comparable sales, which makes it more evidenceable than commercial GDV but also more exposed if the comparables are thin or the scheme is unusual for its location. A scheme priced above everything around it needs to explain why.
The build cost. A costed schedule from a credible contractor, ideally under a fixed price contract. Optimistic build costs are the most common reason a scheme that looked comfortable fails at underwriting.
Absorption. How long the units take to sell, not just what they sell for. A 40 unit scheme in a market absorbing four units a month carries a sales period the facility has to accommodate.
The team. Contractor, architect, QS. On a first scheme this matters more than the sponsor's own track record, because it is what a credit committee can actually assess.
Conversions and permitted development
Conversion schemes, including permitted development from commercial to residential, are funded on the same mechanics with two differences. The existing building carries risk a greenfield site does not, since what is found on opening up is not fully knowable in advance, and contingency needs to reflect that rather than mirror a new build allowance.
Second, the consent route matters. Permitted development rights are narrower than they appear and prior approval is not automatic, so a lender will want the planning position evidenced rather than asserted.
Getting out
Sales, an exit bridge to buy marketing time at a lower rate, or a term facility if you intend to hold. The decision is not primarily a cost comparison, and getting it wrong is more expensive than any rate difference. See extend, bridge or refinance.
Before the build, the route is often land bridging, with or without planning.
The GDV a valuer will actually use
Developers routinely model gross development value as the sum of individual unit sales at full price. Valuers rarely see it that way on a multi unit scheme. Where the lender's exit is a disposal of the whole scheme rather than a unit by unit sales programme over many months, the valuation will reflect that shorter horizon, and an aggregate or single lot figure will sit below the sum of the parts.
The practical protection is to establish at terms stage which figure your loan to GDV is applied to, and to give the valuer proper comparable evidence for the specification you are actually building rather than for the local average. 90 and 180 day valuations explained →
Timeline on a residential development facility
Six to twelve weeks to first drawdown. Beyond the valuation and legals, the item that most often moves the date is pre-commencement conditions: a scheme with conditions still to discharge is not ready to draw, however complete the planning consent looks on paper.
The practical sequence is to get the appraisal, the build contract and the professional team pack in front of the lender early, because those are what the monitoring surveyor will want. The honest bridging timeline →
Residential Development FAQs
How much can I borrow for a residential development?
Typically up to 70% of gross development value or 85% of total project cost, whichever cap bites first. On most residential schemes the cost cap binds before the value cap, which catches out borrowers who have built their appraisal around end value rather than cost. The gap is your equity, and land already held at an uplifted value with planning can count towards it.
What does a lender want to see on a residential scheme?
Comparable sales evidence supporting the gross development value, a costed build schedule from a credible contractor and ideally a fixed price contract, a realistic absorption rate for how quickly units will sell, and a professional team. On a first scheme the strength of the contractor, architect and quantity surveyor matters more than the sponsor's own track record, because it is what a credit committee can assess.
Is conversion funded differently from ground up?
The mechanics are the same but two things differ. An existing building carries risk a greenfield site does not, because what is found on opening up is not fully knowable, so contingency should be higher than a new build allowance. And on permitted development the consent route needs to be evidenced rather than assumed, since prior approval is not automatic and the rights are narrower than they appear.