Development Finance in Hammersmith

Development finance is a specialist form of property funding designed specifically for construction and major refurbishment projects. Unlike a traditional mortgage, development finance is drawn down in stages as your build progresses, with interest typically charged only on the amount drawn rather than the total facility. This makes it an efficient funding solution for property developers undertaking new builds, conversions, and substantial renovations in areas like Hammersmith where project timelines and costs need careful management.

For Hammersmith development projects, you can typically borrow up to 70% of total project costs (Loan to Cost) and up to 65% of the projected Gross Development Value (GDV). Loan sizes range from £250,000 for smaller refurbishment schemes to £25 million or more for larger multi-unit developments. The exact amount depends on factors including your development experience, the strength of the project appraisal, planning status, and the location within Hammersmith. Riverside sites in W6 and regeneration zone projects in White City often attract stronger lending appetite due to proven end-values.

Development finance rates for Hammersmith projects currently start from 0.65% per month, which equates to approximately 7.8% per annum. Your actual rate will depend on several factors: the loan-to-cost ratio, your track record as a developer, the project risk profile, and your exit strategy. Lower-risk schemes with experienced developers and strong GDV projections can access rates at the more competitive end of the scale. We compare terms across 50+ lenders to ensure you receive the most favourable rate available for your specific project.

Most development finance lenders require planning permission to be in place before they will release funds. However, there are options available at different planning stages. Some lenders will provide a credit-backed term sheet subject to planning, allowing you to secure site acquisition funding while planning is being determined. For Permitted Development conversions in Hammersmith, you will need your Prior Approval in hand. We also work with specialist lenders who fund planning gain strategies, where the uplift in value from obtaining consent forms part of the business plan.

We provide indicative terms within 24 hours of receiving your full project details. From formal application to completion, the typical timeline is 3-6 weeks depending on the complexity of your Hammersmith development. Straightforward schemes with clean title, detailed planning consent, and experienced developers can complete in as little as 2-3 weeks. More complex projects involving conservation area consents, listed building considerations, or multi-layered capital structures may take 4-8 weeks. We proactively manage the process to minimise delays at every stage.

While experienced developers typically secure the most competitive terms, first-time developers can absolutely access development finance. Lenders assess your overall capability, which includes any relevant construction, project management, or property investment experience. If you are new to development, appointing an experienced project manager or using a reputable main contractor can significantly strengthen your application. For Hammersmith projects, demonstrating knowledge of the local market and having a realistic development appraisal based on comparable evidence from W6, W12, or W14 postcodes will support your case.

True 100% development finance, where a single lender covers all project costs, is extremely rare. However, it is possible to achieve 100% funding by combining senior development finance (typically covering 65-70% of costs) with mezzanine finance (covering a further 15-25%). This layered approach means you may only need to contribute 5-10% of total project costs as equity. We regularly structure these combined facilities for Hammersmith developers, managing the relationship between senior and mezzanine lenders through intercreditor agreements.

Loan to Cost is the ratio of the loan amount to the total cost of the development project. Total costs include land acquisition, stamp duty, build costs, professional fees, and finance costs. For example, if your Hammersmith project has total costs of £2 million and the lender offers 70% LTC, the maximum facility would be £1.4 million. LTC is the primary metric lenders use to determine how much they will lend, alongside the Gross Development Value constraint. Understanding your LTC position is essential for structuring the optimal capital stack for your project.

Gross Development Value is the estimated market value of the completed development. For a residential scheme in Hammersmith, the GDV is calculated by assessing what each completed unit would sell for based on comparable evidence from recent transactions in the local area. Lenders typically cap their exposure at 60-65% of GDV. For a Hammersmith development with a projected GDV of £4 million, the maximum senior facility based on GDV alone would be £2.4-£2.6 million. An independent RICS valuer confirms the GDV as part of the lending process.

Development finance is released in tranches as your project progresses through defined build stages. After the initial drawdown to fund site acquisition, subsequent releases are made against Quantity Surveyor certifications. The QS visits the site, typically monthly, to verify that the works claimed have been completed to an acceptable standard. Typical drawdown stages include: site preparation and foundations, substructure, superstructure, roofing, first fix (plumbing, electrics, carpentry), second fix, and final finishes. Interest is only charged on funds that have been drawn, which keeps your finance costs lower during the early stages of the build.

Lenders accept several exit strategies for development finance. The most common are: outright sale of completed units on the open market, which is particularly strong in Hammersmith given the area's consistent buyer demand; refinancing onto long-term buy-to-let or commercial mortgages, which suits developers looking to hold units as rental investments; and a combination of partial sales and partial retention. For Hammersmith projects, the strong rental market and capital growth prospects mean that refinance exits are increasingly popular, allowing developers to retain exposure to a market that has historically delivered strong returns.

Before a development finance facility completes, there are several costs to be aware of. A valuation fee is required to cover the independent RICS valuation, which varies based on project size but typically ranges from £2,000-£5,000 for Hammersmith schemes. Legal fees cover both your own solicitor and the lender's legal costs. Some lenders charge an application or assessment fee, though many waive this. The arrangement fee (typically 1-2% of the facility) is usually deducted from the first drawdown rather than paid upfront. We provide a complete breakdown of all anticipated costs at the indicative terms stage so there are no surprises.