Developer Exit lending is the concept of funding a new build development before the plots have been sold. The primary objective is to release equity cash funds which provides time and space to sell the plots and allows the developer to move onto their next project at the same time.

As we are currently in lockdown many developments may have issues with broken sale chains, moving house decisions been put on hold and general uncertainty causing transactions to be paused. This all impacts the developer in releasing the funds they were expecting from the sale of completed plots. In addition current funding of the development may also be on a deadline which is now being stretched and putting the developer under pressure.

In these challenging circumstances developer exit becomes a hugely important option for the developer to leverage for a number of reasons:

  1. The developer may be asked to accept a discount on the plot and facing the consequences of not receiving equity from the sale the developer could feel under pressure to comply. Using developer exit finance allows the developer to release 75% of the market value for up to 2 years providing time and space to sell the plot at its true value.
  2. The developer may have planned to use the funds from plot sales for another project which is now at risk as completions have halted. Losing the profit from the future project outweighs the costs of borrowing against the completed plots.
  3. The developer is being presented with lucrative opportunities due to the current market but doesn’t have the cash to take full advantage. Releasing equity provides a hunting fund the developer can leverage which will return more profit than the cost of borrowing.
  4. The developer is near completion and needs to pay off current development funding which is due to expire and could result in penalties.

Developer exit can apply at the following stages:

  1. Wind and Water Tight Stage.

At this point you can refinance based on the new gross development value (GDV). The property now has a significant increase in value but still less than the GDV of a finished product. However you may have reached this stage before the building work stopped and you can refinance the site at 75% of current value.


If the lender is able to obtain a valuation you will be able to borrow 75% of the site value and this could be critical in funding the job to completion. Please note any lender will require 1st charge so if you have used development funding the new loan will need to repay the existing lender first and the balance being equity for you to use.


  1. Practical completion.

At this stage the property is essentially finished and can put on the market for sale.

If you can obtain a valuation you can now borrow 75% of the market value for up to 24 months which should provide more than sufficient time to resolve the current Covid conditions and the market to return to some degree of normality.

This funding enables the developer to take the loan fully rolled up so they do not need to make loan service payments. They simply pay the loan down when the properties are sold and completed. The developer can also take equity from the sale of properties so long as the current outstanding loan does not increase as a percentage of the property value over 75%. For example – if your selling 2 houses at £100k each and borrow £150K then sell one property for £100k you could pay £75k off the loan and retain £25k as the loan still stands at 75% loan to value (£75k loan against £100k property).


  1. Plots marketed for sale.

Additional product available – Developer Part Exchange.

In addition to refinancing you can also use developer part exchange which is a relatively new product. This enables the developer to obtain 75% of the purchase price of their customers house. The developer buys their customers house and the customer buys their new build. There are no chains involved and it puts the developer in much more control of the sales process. The developer also has the opportunity to improve and add value to the customers house and make an additional profit. It’s a useful tool in the kit bag for developers to make more sales and keep the building workers busy with additional short term projects.


Whilst lending to new developments is currently challenging, lending to existing projects is available and I expect it will be very useful for developers looking for a solution to take them beyond the life cycle of coronavirus. Indeed with many conveyancing transactions being cancelled and chains breaking there will be lots of new home house sales that have fallen through as a result and the developer has options to help them through this difficult time without having to resort to offering discounts in order to realise the equity.

There are a number of lenders that provide a service in the developer exit and developer part exchange space that are open for new applications and processing applications in as little as 2 weeks if fast tracked. Generally applications take 6-8 weeks to draw.