As 2025 progresses, both seasoned and first-time developers are noticing how differently lenders are assessing risk. The fundamentals of development finance haven’t disappeared — lenders still want viable projects backed by competent teams, but the
way those projects are assessed, priced, and monitored has evolved.
After several years of market turbulence, funding is still flowing. Yet the process now demands more preparation, more detail, and far greater discipline. Deals that might have sailed through credit approval two years ago are today subject to deeper analysis and stricter risk controls.
For developers, this means success is no longer just about securing land or planning consent, it’s about presenting a fully de-risked, lender-ready proposition. A strong project can still find funding quickly, but a loosely packaged deal will struggle to progress at all.
Why Development Finance Still Matters in 2025
Even in a cautious lending climate, development finance remains one of the most important tools for property growth across the UK. It funds everything from ground-up new builds to refurbishments, conversions, and the completion of stalled or part-built schemes.
Demand remains resilient. Developers continue to see opportunities in urban regeneration, commercial conversions, and sustainable housing, particularly in the regions where demand is outstripping supply. Yet lenders, having faced several years of construction cost inflation and uncertain valuations, are taking a forensic approach to underwriting.
Credit committees now want to see proof of control at every stage: verified build costs, realistic timelines, and solid exit plans. The
capital is still available, but the bar for approval has risen. Developers who understand this shift — and adapt their approach accordingly — will continue to access the funding they need.
What’s Changed in 2025
Several clear trends have emerged this year, reshaping how lenders structure and approve deals. Understanding them early allows developers to pre-empt questions, avoid delays, and build credibility from the outset.
Greater Scrutiny on Exit Strategy
Lenders want certainty of repayment. It’s no longer enough to state that units will sell or refinance will occur. They now expect fully evidenced exit plans supported by market comparables, pre-sale data, or signed term sheets. A vague exit route is one of the quickest ways to lose lender confidence.
Tighter Cost Controls
Build cost inflation has made cost planning one of the most heavily scrutinised areas of any proposal. Lenders now expect fixed-price contracts or detailed contingencies built into budgets. Loose or optimistic costings can suggest inexperience, which delays credit approval or leads to reduced leverage.
Lower Loan-to-GDV Ratios
While leverage remains available, it has tightened. Where developers could once achieve 70% of GDV, most lenders are now comfortable at 60–65%. This shift pushes borrowers to contribute more equity — but it also reduces overall funding risk and creates more sustainable project outcomes.
Pre-Sales and Pre-Lets Gain Weight
For multi-unit or mixed-use schemes, lenders are increasingly requiring evidence of pre-sales or pre-let agreements. These commitments de-risk the project by confirming demand before construction completes, and they help lenders build confidence in the borrower’s exit assumptions.
Focus on Experience and Track Record
Lender appetite now varies sharply depending on experience. Developers with a proven record of delivering on time and on budget are favoured. Those without a track record can still access funding but may need to rely on stronger professional teams and higher personal contributions.
Preference for Phased Drawdowns
To control risk exposure, many lenders are releasing funds in smaller, milestone-based tranches. Each stage — from groundworks to completion — must be validated before the next drawdown. This makes cash flow management critical and reinforces the need for reliable project monitoring.
What Lenders Expect from Borrowers in 2025
A successful development finance application in 2025 looks far more like a professional investment proposal than a speculative pitch. Lenders expect comprehensive information, credible forecasts, and visible commitment from the borrower.
They want to see a
fully assembled professional team, including architects, quantity surveyors, contractors, and project managers with demonstrable track records. They expect
planning permissions to be in place, ideally with all conditions cleared. They want
realistic costings and timelines backed by professional assessments, and a
clear, evidence-based exit plan.
Equity input also matters. A borrower who has meaningful funds at risk signals alignment of interest and confidence in the project’s success. The more transparent and professional the presentation, the faster credit approval tends to follow.
How Lending Criteria Have Shifted
Development finance in 2025 is still flexible, but the metrics underpinning decisions are firmer than before.
Typical
loan-to-cost ratios (LTC) now fall between 75% and 85%, depending on experience and project type.
Loan-to-GDV is usually capped between 60% and 65%, while
interest rates range from around 8.5% to 11%. Minimum
equity contributions of 10–30% are now standard, and most lenders prefer projects between £1m and £10m in size — although higher-value schemes remain fundable for experienced sponsors with strong collateral.
Private lenders and family offices have become more active again, offering bespoke structures where banks hesitate. They can stretch LTC or GDV limits for borrowers with exceptional assets or track records, but they expect the same level of professional presentation and reporting.
How Willow Private Finance Supports Developers
At
Willow Private Finance, we’ve seen these changes first-hand across dozens of live cases. Developers who approach the market with a professional, de-risked proposition are still securing competitive terms — even as traditional lenders tighten.
Our team works across the UK and internationally to help developers structure their finance intelligently. We know which lenders are active, how their criteria are evolving, and what they prioritise in an approval process. We guide clients through planning and cost reviews, GDV comparables, exit modelling, and equity optimisation to position their projects for success.
We also maintain close relationships with
private and mezzanine lenders who are filling funding gaps left by banks. These partners are increasingly important in 2025, especially for projects that require speed, flexibility, or layered funding structures.
The difference often comes down to presentation. A lender sees hundreds of proposals each month. A well-prepared, data-driven case — supported by a strong advisory team — stands out immediately.
The Smart Developer’s Advantage
The developers who will thrive in 2025 are not necessarily those with the most aggressive leverage or the largest balance sheets. They are the ones who prepare early, plan conservatively, and work with advisors who understand lender psychology.
Success in this environment comes from clarity: having clean documentation, a credible timeline, and contingency built into every assumption. It’s about demonstrating that you understand not just your project, but the lender’s risk.
This isn’t a market to fear — it’s a market to navigate with precision. With expert guidance, realistic financial planning, and a transparent approach, developers can still move decisively while others stall. The money hasn’t disappeared; it has simply become more selective.
Frequently Asked Questions
1. Is development finance still available in 2025?
Yes — development finance remains widely available in 2025, but lenders are more selective. They’re prioritising experienced borrowers, detailed exit plans, and professionally packaged proposals. The key isn’t availability of funds, but how well your project is structured and presented.
2. What are the biggest changes in development finance this year?
Lenders have tightened their criteria. Expect lower loan-to-GDV ratios, greater scrutiny of costs, mandatory contingency allowances, and closer oversight of exit strategies. Many lenders are also favouring phased drawdowns and requiring more equity input from borrowers.
3. Can first-time developers still get funded in 2025?
Yes, but they face a higher bar. First-time developers can secure funding by surrounding themselves with a strong professional team, showing clear cost control, and committing meaningful equity. Using an experienced broker like Willow can help access lenders who are still open to new entrants.
4. How much equity do I need for development finance in 2025?
Most lenders now require between 10% and 30% of total project costs in equity. However, the exact figure depends on your track record, project type, and exit plan. Developers with strong assets, guarantees, or joint venture partners may negotiate more flexible structures.
5. What can I do to improve my chances of approval?
Preparation is everything. Have full planning in place, a clear and evidenced exit strategy, realistic costings with contingencies, and a proven professional team. Engage with a whole-of-market broker early to match your proposal to the right lender appetite.
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