With 2025 well underway, developers—both seasoned and new—are seeing noticeable shifts in how development finance is structured, approved, and priced. If you’re planning a project this year, understanding what’s changed could make or break your funding success.

This blog will walk through what’s different in today’s market, what lenders are really looking for now, and how you can adapt your funding strategy to get the green light.

🧱 Why Development Finance Still Matters in 2025

Development finance remains a cornerstone of property growth across the UK. Whether you’re building from the ground up, converting a commercial site, or finishing a part-completed scheme, having the right funding structure is essential.

In 2025, demand for development finance is strong—but lenders are more cautious. With rising construction costs, planning complexities, and macroeconomic uncertainty, securing funding now requires a sharper, more professional approach.

🔄 What’s Changed in 2025?

Here’s what’s different this year compared to previous lending environments:

• Higher Scrutiny on Exit Strategy
  Lenders want rock-solid evidence that you can repay the loan, whether that’s through sales, refinance, or rental income. Vague exit strategies are no longer tolerated.

• Tighter Cost Controls
  Build cost inflation has forced lenders to analyse costings in forensic detail. They expect fixed-price contracts or robust contingencies built in.

• Reduced Loan-to-GDV Ratios
  Many lenders have quietly lowered their maximum GDV lending thresholds. Where 65–70% GDV was previously common, some are now capping at 60%.

• Pre-Sales and Pre-Lets Gaining Importance
  For larger or multi-unit schemes, having pre-sales or pre-let agreements is becoming a requirement—not just a bonus.

• More Focus on Borrower Track Record
  Lenders want to see previous experience. First-time developers can still get funding, but they’ll likely need a strong professional team and potentially more equity input.

• Increased Preference for Phased Drawdowns
  To manage risk, lenders are staging funds more tightly—releasing them only when key construction or planning milestones are met.

🔍 What Do Lenders Want to See Now?

To stand out in 2025, you need to present a well-packaged, de-risked opportunity. Here’s what lenders will expect to see from day one:

✅ A Full Professional Team

Architects, QS, contractors, project managers—all appointed, with track records and references.

✅ Planning in Place

Ideally with all conditions cleared. Projects that are “shovel-ready” are far more attractive.

✅ Clear Exit Plan

Whether sale or refinance, your lender wants a defined, evidenced exit with market comparables.

✅ Realistic Costings

Full development appraisal with contingencies and inflation accounted for.

✅ Personal Commitment

Equity input from the developer shows belief in the project and helps align incentives.

📊 How Lending Criteria Has Shifted

Rather than a table, here’s a breakdown of typical 2025 expectations from lenders:

• Loan-to-Cost (LTC): 75–85% (lower for riskier schemes)
• Loan-to-GDV: Typically capped at 60–65%
• Interest Rates: Ranging from 8.5% to 11% depending on risk, size, and borrower profile
• Minimum Equity Contribution: 10–30%
• Project Size Preference: Many lenders now favour deals between £1m and £10m—though larger projects are still fundable with strong sponsors

💼 How Willow Can Help You Navigate 2025 Lender Demands

At Willow Private Finance, we work with developers across the UK and internationally to source the most competitive and appropriate finance—no matter the market conditions.

We understand which lenders are currently active, what they're favouring, and how to structure a proposal to maximise success. From planning and cost reviews to GDV comparables and exit modelling, our team provides strategic guidance throughout the process.

🧠 Tips to Strengthen Your Application

Get Your Team in Place Early
Appoint your professionals before you approach lenders.

Rehearse the Exit
Know your numbers on resale, refinance, or rentals. Be ready to back them up with market data.

Build a Credible Timeline
Unrealistic completion timelines are red flags. Be honest and evidence-based.

Don’t Rely on Maximum Leverage
If you can bring more equity, do. It boosts lender confidence and negotiation power.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.