What the £2.73m Knutsford facility says about first-time developer finance

A notable first project

Bridging Loan Directory reports that Assetz Capital has provided a £2.73m development finance facility for the ground-up construction of two four-bedroom detached houses in Knutsford, Cheshire. The borrower is a first-time developer, while the 18-month facility has been structured at 70% loan-to-gross-development value.

The significance lies less in the size of the scheme than in the lender’s willingness to support a borrower undertaking a first development. A limited development track record can create additional underwriting questions, but it does not necessarily prevent a transaction from proceeding. The strength of the site, professional team, delivery plan, cost assumptions and proposed exit can all influence how a lender assesses the overall proposition.

Experience is only one part of underwriting

First-time developers may need to demonstrate that relevant capability exists around the project, even when they have not previously acted as principal developer. Lenders are likely to examine the experience of the contractor, architect, quantity surveyor and other advisers, alongside the borrower’s own commercial background and decision-making responsibilities.

This makes presentation particularly important. A credible application should give the lender a clear account of ownership, planning status, construction strategy, procurement, anticipated drawdowns and the route to repayment. Where responsibilities are unclear or supporting information is incomplete, the absence of a previous development track record may become more material.

Assetz Capital’s New Business Director, Jake Hiskett, told Bridging Loan Directory that supporting first-time developers is an important part of the lender’s activity and linked the facility to bringing family homes forward in a sought-after location. That provides useful context, although one completed transaction should not be treated as evidence that every lender will adopt the same risk approach.

Leverage must be considered alongside liquidity

The reported 70% LTGDV structure illustrates why headline leverage is only one element of a development facility. LTGDV measures debt against the completed scheme’s expected gross value. It does not, by itself, explain the treatment of land value, build costs, professional fees, interest, contingency or the timing of equity contributions.

For developers, the practical question is whether the capital structure remains workable throughout construction. Ground-up projects require close coordination between expenditure, lender monitoring and staged funding. Borrowers should understand which costs are eligible, what must be funded from equity and how the project would respond if expenditure or timing departed from the original programme.

The 18-month term places focus on execution and exit

The facility term reported by Bridging Loan Directory is 18 months. Within that period, the developer must manage construction and the intended repayment route. The lender’s assessment will therefore extend beyond whether the completed homes appear commercially attractive. Programme realism, sales assumptions and the capacity to absorb delay are central to the financing case.

For developers and investors considering similar projects, the transaction highlights several priorities:

• Match the proposed lender to the borrower’s experience profile rather than approaching the market solely on headline leverage.

• Present a coherent professional team with clearly defined responsibilities and relevant delivery capability.

• Ensure the cost plan, programme, contingency and funding mechanics are aligned before credit assessment.

• Support the exit strategy with evidence specific to the scheme and location, while considering how delays could affect repayment.

Implications for the finance market

This case indicates that specialist development finance can accommodate a first-time borrower where the wider proposition satisfies the lender’s requirements. It also underlines the value of structuring and lender selection. The objective is not simply to identify a lender willing to consider new entrants, but to secure a facility whose drawdown process, leverage basis, term and conditions fit the project’s delivery plan.

For capital providers, supporting credible new developers may broaden origination while contributing to housing delivery. For borrowers, however, first-time status raises the importance of preparation. A well-located scheme is not a substitute for an executable plan, adequate liquidity and a defensible exit.