Can First-Time Developers Get Development Finance?
Yes. While development finance lenders prefer experienced borrowers, the market has evolved significantly and several lenders now actively accommodate **first-time developers**. The key is understanding what lenders need from you when you do not have a completed project to point to.
Every experienced developer was once a first-timer. Lenders recognise this, and many have created products or criteria specifically designed for developers undertaking their first scheme. However, you will need to compensate for lack of track record with other strengths: a capable professional team, adequate equity, a well-prepared application, and a realistic project.
This guide covers everything you need to know about securing [development finance](/services/development-finance) for your first development project.
What Lenders Look for in First-Time Developers
Relevant Professional Background
Lenders place significant weight on **transferable experience**. You do not need to have built houses before, but having professional experience that demonstrates relevant skills makes a material difference:
- Construction industry - builders, project managers, site managers, quantity surveyors
- Property professionals - estate agents, surveyors, architects, planners
- Finance professionals - accountants, bankers, financial advisers with property exposure
- Building trades - electricians, plumbers, joiners who understand construction
- Landlords and investors - experience managing property and refurbishment projects
If your background is entirely unrelated to property or construction, you can still access development finance, but you will need to demonstrate strong mitigation through your professional team and project structure.
Equity Contribution
First-time developers typically need to contribute **more equity** than experienced borrowers:
- Experienced developers: 25-30% of project costs as equity
- First-time developers: 30-40% of project costs as equity
The additional equity serves two purposes: it reduces the lender's exposure, and it ensures you have meaningful financial commitment to the project's success.
| Borrower Profile | Typical LTGDV |
|---|---|
| 10+ schemes completed | Up to 70% |
| 3-9 schemes completed | Up to 65-70% |
| 1-2 schemes completed | Up to 60-65% |
| First-time developer | Up to 55-65% |
Professional Team
For first-time developers, your professional team is critical. Lenders want to see experienced professionals compensating for your lack of direct development experience:
- Architect - RIBA registered with experience on similar projects
- Quantity Surveyor - to verify and manage build costs
- Main Contractor - experienced, properly insured, with a track record on similar schemes
- Project Manager - if you are not managing the project yourself, a dedicated PM adds confidence
- Solicitor - with development finance and property development experience
- Broker - a specialist development finance broker who can present your case effectively
**Key Takeaway:** Your professional team is your substitute for personal track record. Invest in assembling experienced professionals, even if their fees are higher. The difference between a good and mediocre team can be the difference between approval and decline.
The Right First Project
Lenders prefer first-time developers to start with lower-risk, manageable projects. Ideal characteristics for a first scheme:
- Small scale - 1 to 6 units rather than 20+
- Simple construction - standard residential rather than complex commercial or listed buildings
- Strong location - established residential area with proven demand
- Clear planning - full planning permission already granted
- Standard exit - open market sale to owner-occupiers
- Realistic margins - minimum 20% profit on GDV (higher than the 15% accepted for experienced developers)
Projects to avoid for your first scheme:
- Large-scale developments (10+ units)
- Mixed-use schemes with significant commercial elements
- Listed building conversions
- Remote or untested locations
- Schemes requiring complex planning applications
- Projects with very tight margins
How to Prepare Your First Application
Step 1: Choose the Right Project
Select a project that matches the criteria above. Do your homework on the location, comparable values, and build costs before committing to a site purchase.
Step 2: Assemble Your Team
Appoint your professional team early. Their involvement in preparing the application strengthens your case:
- Architect to produce detailed drawings and specifications
- QS to prepare a build cost report
- Contractor to provide a tender and programme
- Solicitor to handle legal due diligence
Step 3: Prepare a Comprehensive Project Appraisal
Your project appraisal should demonstrate thorough preparation:
- Site details - location, size, planning status, photos
- Proposed scheme - architect's drawings, unit schedule, specifications
- GDV assessment - comparable evidence supporting your value assumptions
- Build costs - QS-verified cost plan with elemental breakdown
- Programme - realistic build schedule showing all key stages
- Finance costs - interest, fees, and professional costs estimated
- Profit calculation - demonstrating a minimum 20% profit on GDV
- Contingency - minimum 10% of build costs
- Exit strategy - how the development will be sold or refinanced
- Sensitivity analysis - showing the project remains viable if GDV falls 10% or costs rise 10%
Step 4: Prepare Your Personal Information
Lenders will assess you as well as the project:
- CV or biography highlighting relevant experience
- Personal financial statement showing assets, liabilities, and net worth
- Proof of equity - evidence of the funds you will contribute
- 12 months' bank statements
- Credit history - address any adverse credit proactively
- Tax returns or accounts for any trading businesses
Step 5: Work with a Specialist Broker
A specialist broker is arguably more important for first-time developers than for experienced ones. A good broker will:
- Identify lenders with specific first-time developer products
- Present your application to highlight your strengths and mitigate concerns
- Coach you on what lenders need to see
- Negotiate terms that reflect the quality of your project, not just your experience level
- Manage the process from application to drawdown
[Contact our team](/contact) to discuss your first development project.
**Key Takeaway:** Preparation is everything for first-time developers. The more thorough your project appraisal, the more confidence lenders have in your ability to deliver. Spend the time and money to get your application right.
Which Lenders Accept First-Time Developers?
The lender landscape for first-time developers:
Most Receptive
- Specialist development lenders such as Hampshire Trust and Shawbrook - many have specific criteria for first-time developers with strong teams
- Challenger banks including Allica Bank, Recognise, and Atom Bank - often more flexible on experience requirements
- Private development funds - assess each case on merit, less prescriptive criteria
Moderate Appetite
- Mid-market specialists such as Aldermore, Investec, and Paragon - will consider first-timers with very strong applications
- Some bridging lenders for heavy refurbishment projects rather than ground-up
Least Likely
- High street banks (Lloyds, NatWest, Barclays) - generally require a proven track record for development finance
- Institutional funds - minimum experience thresholds usually apply
Typical First-Time Developer Terms
| Parameter | Typical Range |
|---|---|
| LTGDV | 55-65% |
| Interest rate | 8.5-11% pa |
| Arrangement fee | 1.5-2% |
| Minimum equity | 30-40% of costs |
| Maximum units | 4-8 (varies by lender) |
| Term | 12-18 months |
Strategies to Strengthen Your Application
1. Start with Refurbishment
If you are completely new to property development, consider starting with a [heavy refurbishment](/knowledge-hub/heavy-refurbishment-finance-guide) project rather than ground-up construction. Refurbishment is generally:
- Lower cost and lower risk
- Faster to complete
- Funded by more lenders for first-timers
- A good stepping stone to ground-up development
Completing one successful refurbishment project gives you a track record for your next application.
2. Partner with an Experienced Developer
A [joint venture](/knowledge-hub/joint-venture-development-finance) with an experienced developer can open doors:
- The experienced partner satisfies lender track record requirements
- You gain hands-on experience under supervision
- Risk is shared between partners
- The experienced partner may contribute equity, knowledge, or contractor relationships
Ensure the JV agreement clearly defines roles, responsibilities, profit shares, and decision-making authority.
3. Use a Design and Build Contractor
A **design and build contractor** takes responsibility for both the design and construction of the development. This reduces risk for the lender because:
- A single entity is responsible for delivery
- The contractor is contractually committed to completing within budget and programme
- Professional indemnity insurance covers design risk
- Less project management burden on the developer
4. Over-Prepare Your Application
First-time developers should go beyond the minimum requirements:
- Commission agent appraisals from 2-3 local agents confirming your GDV assumptions
- Obtain competitive tenders from at least 2-3 contractors
- Include a detailed programme showing all activities and dependencies
- Provide comparable evidence that is comprehensive and well-presented
- Demonstrate personal research into the local market, demand drivers, and buyer profiles
5. Demonstrate Financial Strength
Beyond the equity requirement, demonstrating broader financial strength gives lenders comfort:
- Liquidity to cover cash flow gaps between drawdowns
- No adverse credit history
- Stable income from employment or business
- Unencumbered assets that could provide additional security if needed
6. Start Local
Developing in an area you know well demonstrates market knowledge and allows you to speak confidently about demand, buyer profiles, and local conditions. This is more convincing than developing in an unfamiliar area solely because the numbers look attractive.
Common Mistakes First-Time Developers Make
Overestimating GDV
Enthusiasm can lead to cherry-picking the highest comparables. Use a balanced range of evidence and be conservative. An independent valuer will form their own view, and a significant gap between your estimate and the valuation undermines your credibility.
Underestimating Costs
First-time developers frequently underestimate:
- Professional fees (architect, QS, structural engineer, solicitor)
- Finance costs (interest, arrangement fees, monitoring)
- Service connection costs (water, electric, gas, drainage)
- Section 106 and CIL obligations
- Marketing and sales costs
Choosing Too Large a First Project
Ambition is good, but your first project should be manageable. A 4-unit scheme that runs smoothly builds a better track record than a 20-unit scheme that encounters problems.
Neglecting the Exit Strategy
Every development must have a clear, evidenced exit. Do not assume units will sell at your projected prices within your assumed timescale. Research the local market, obtain agent advice, and build in sales contingency time.
Skipping the QS
A quantity surveyor's cost report costs £2,000-£5,000 but provides independent verification of your build cost estimate. This is money well spent, both for your own confidence and for lender credibility.
Building Your Track Record
Each completed project strengthens your position for the next one. After your first successful development:
- Document everything - before and after photos, cost schedules, timelines, profit achieved
- Obtain references - from your lender, monitoring surveyor, and contractor
- Update your CV - add the completed project with key metrics
- Review lessons learned - what went well, what would you do differently?
Your second project will benefit from better terms: lower equity requirements, improved interest rates, and access to a wider range of lenders.
Use our [development finance calculator](/calculators/development) to model the economics of your first project.
Summary
Securing development finance as a first-time developer requires more preparation, more equity, and more mitigation than an experienced borrower would need. However, the market is more accessible than ever, with several lenders actively welcoming first-time developers who present well-prepared applications with strong professional teams.
Start with the right project, assemble an experienced team, prepare a comprehensive application, and work with a specialist broker who knows which lenders are most receptive. Your first project is the hardest to finance - after that, each subsequent scheme becomes easier.
Ready to discuss your first development project? [Contact our team](/contact) for a no-obligation conversation about your plans.
*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*