The Appeal of Overseas Development in 2025

UK investors have always been drawn to opportunities abroad. Warmer climates, high rental yields, and expanding tourism sectors make international property development attractive. In 2025, the appeal is even stronger: post-pandemic shifts in working habits, governments courting foreign investors, and demand for sustainable, energy-efficient builds have created fertile ground for those looking to fund projects overseas.

But financing property development abroad while living in the UK is not straightforward. Lenders take a cautious approach, regulatory environments vary dramatically, and structuring mistakes can be costly. This guide explores how UK residents can finance international development projects successfully in 2025.

The Challenges of Financing Overseas Development

Securing finance for a UK development is already complex. Add in cross-border elements and the hurdles multiply:

• Currency risk: Exchange rate fluctuations can impact both the cost of funding and future returns. For example, if your development costs are in euros but your income and loans are in pounds, a weak pound could inflate costs dramatically.

• Legal systems: Property rights, planning laws, and security enforcement differ by jurisdiction. What’s standard in the UK may be completely different in Spain, France, or the UAE.

• Lender appetite: UK high street banks rarely support overseas developments. Specialist lenders, private banks, or local banks in the development country are usually required.

• Tax considerations: Double taxation treaties, inheritance tax, and capital gains can complicate matters if not structured properly.

For comparison, see our blog on Navigating French Property Finance as a Brit, which highlights just how nuanced international borrowing can be even within Europe.

Lender Options for UK-Based Borrowers

In 2025, there are three main lender categories available to UK-based borrowers looking to finance development abroad:

1. Local Banks in the Development Country

Many developers choose to fund projects via banks in the jurisdiction where the property is located. This makes sense—local lenders understand planning regulations, have valuation expertise, and can monitor progress more effectively. However, non-resident borrowers often face stricter criteria and higher deposit requirements.

2. UK-Based Private Banks and Specialist Lenders

Some UK private banks and international lenders offer cross-border development finance, particularly if the borrower has an established relationship. These lenders may look at global wealth rather than just the project itself, which can be advantageous for high net worth clients.

This route is often explored by clients we support on projects where financing is needed across multiple jurisdictions. Similar to the strategies discussed in our blog on High Net Worth Mortgages in 2025, lenders will often assess overall wealth and liquidity.

3. Specialist Development Finance Providers

A small pool of boutique finance houses specialise in international projects, typically at higher interest rates. These can be attractive where traditional lending routes are unavailable, or speed is essential.

For developers interested in shorter-term options, our guide on Unlocking Capital with Bridging Loans explains how bridging finance can form part of an international funding strategy, particularly for acquiring land or covering early-stage costs.

Structuring Finance Across Borders

The way you structure your development finance abroad will determine its success as much as the lender itself. Common structures include:

• SPVs (Special Purpose Vehicles): Many jurisdictions require or encourage development to be run through a local company. This can ring-fence risk but also creates tax filing obligations.

• Parent Company Guarantees: UK investors may be asked to provide guarantees from a UK company, especially if the overseas SPV has no track record.

• Joint Ventures: Partnering with a local developer can open access to finance that would otherwise be unavailable to foreign investors.

This mirrors the challenges we’ve covered in SPVs vs. Trading Companies: What Landlords Must Know in 2025, where structuring decisions significantly impact both funding and tax outcomes.

Currency and Risk Management

A major risk for UK investors is currency volatility. Consider the pound’s fluctuations against the euro or dollar over the last decade—this can make or break development margins. Hedging solutions, such as forward contracts or multi-currency facilities, are increasingly popular in 2025.

In addition, lenders may require contingency reserves in the funding plan to cover cost overruns linked to currency shifts or inflation in material costs.

Tax and Legal Considerations

Before arranging finance, UK-based developers must seek tax and legal advice in both the UK and the development country. Some key issues include:

• Double taxation treaties: These prevent you from paying tax twice on the same income, but rules differ by country.

• Inheritance tax planning: Owning overseas property can create unexpected liabilities. Our blog on Inheritance Tax Planning with Whole of Life Policies shows how strategic use of protection products can safeguard cross-border estates.

• Exit strategy: Will you sell the development locally, or refinance into a long-term facility? Lender appetite for each option differs.

Case Example: UK Developer Expanding into Spain

One client scenario we’ve encountered involved a UK-based investor looking to develop luxury apartments in Spain. The structure involved:

• A local Spanish SPV for the development,
• A UK parent company guarantee, and
• Development finance sourced from a Spanish bank, supplemented by a UK bridging loan to cover land acquisition.

By coordinating finance across jurisdictions, the project secured favourable rates and flexibility—something that would not have been possible relying solely on UK lenders.

How Willow Can Help

At Willow Private Finance, we specialise in helping UK clients secure complex, cross-border funding solutions. Whether you are looking to build in Spain, Portugal, France, or further afield, our expertise lies in:

• Identifying lenders willing to support UK-based developers abroad.
• Structuring SPVs and guarantees to align with lender expectations.
• Managing currency and cross-border tax implications.
• Creating exit strategies that protect your long-term financial goals.

We operate on a whole-of-market basis, meaning we are not tied to specific lenders. This independence allows us to secure funding solutions that suit your specific project, whether through private banks, specialist lenders, or hybrid structures involving bridging finance.

For more insights into strategic funding, see our blog on Development Finance in 2025: What’s Changed and What Lenders Want Now, which details lender expectations for project delivery in today’s environment.

📞 Want Help Navigating Overseas Development Finance?

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

We’ll help you structure the smartest funding plan for your cross-border development.