100% development finance explained

What 100% development finance actually means

100% development finance means the funding covers the entire cost of a scheme, the site acquisition, the build costs and the professional fees, so the developer puts in little or no cash of their own. It is the answer to the question of how to develop property without using your own money, and the two terms most searchers see, 100 percent property development finance and joint venture (JV) development finance, describe the same outcome reached by the same core mechanism: someone else's capital funds the gap where the developer's equity would normally sit.

It matters to be precise about the word 100 percent. Senior development lenders work to a loan-to-GDV ceiling, indicatively around 70 percent of gross development value, and to a loan-to-cost (LTC) limit on total costs. That leaves a real gap between what senior debt advances and the full cost of the job. Reaching 100 percent means filling that gap, and there is no free way to do it: either an equity partner funds it for a share of the profit, or extra layers of debt and additional security are stacked on top. DevExit structures and places both routes; we are an arranger and introducer, not a lender, and the facility is unregulated commercial lending.

How joint venture development finance funds the whole scheme

The cleanest route to genuine day-one funding of 100 percent of costs is a joint venture. A JV investor, sometimes a private debt fund and sometimes an equity development partner, funds the full site purchase and the full build in return for a share of the profit at the end. The developer contributes the deal, the planning, the experience and the delivery; the partner contributes the capital. There is typically no deposit and little or no cash input from the developer, which is exactly why JV finance and 100 percent development finance are treated as the same product across the market.

The price of that is the profit share. A typical JV split is around 50/50 of the net profit once the scheme is sold and the costs and interest are repaid. So the trade-off is straightforward: you fund the scheme with none of your own money, but you give up roughly half the upside. The worked example below is illustrative only and not an offer of finance.

On a scheme with a 3.2 million pound GDV against 1.3 million pounds of build costs, a JV investor covers the full 2.4 million pounds of total costs, and the developer takes home roughly half the 800,000 pound profit having put in no equity. Where a developer can fund part of the equity themselves, the split moves in their favour, so the more cash you contribute, the less profit you give away. These figures are indicative and for illustration only.

Reaching near-100% with stretched senior and mezzanine debt

The second route keeps the profit but engineers the funding out of layers of debt instead of a single equity partner. It starts with stretched senior finance, a higher-leverage form of senior development debt that pushes up to around 90 percent of loan-to-cost rather than the more conservative senior norm. That still leaves a slice of the cost unfunded, so a mezzanine finance layer sits on top of the senior debt to lift total funding closer to 100 percent.

• Stretched senior finance provides the bulk of the money, indicatively up to about 90 percent loan-to-cost, priced above standard senior debt for the higher leverage
• Mezzanine finance tops up the stack above the senior loan, taking a second charge and a higher rate for the extra risk it carries
• Additional security, a cross-collateral charge over another property you own, covers the final gap so the cash the developer needs at the outset falls to little or nothing
• A personal guarantee is usually required across the structure, and 'no personal guarantee' arrangements are rare and priced accordingly

What GDV, margin and track record qualify you

Near-100 percent funding is for seasoned developers, not first-timers. Every serious funder gates it on experience and track record, meaning prior completed schemes of a comparable size and type to the one being funded. A developer proposing a 3.2 million pound GDV block will be asked to evidence delivery of similar projects, because at 100 percent the funder carries almost all the financial risk and is relying on the developer's ability to build and sell.

• Track record: a history of prior completed schemes of comparable scale and type, evidenced with figures and outcomes
• GDV and margin: a scheme with enough profit in it, commonly a gross development margin comfortably into the twenties as a percentage of GDV, so there is room for a profit split or a mezzanine layer
• The right site: planning in place or a clear route to it, with credible build costs and professional fees
• The borrower: usually a special purpose vehicle (SPV) limited company set up to hold the single scheme
• Security and guarantees: often additional security over another asset and a personal guarantee from the principals

Where the developer is lighter on track record, or the margin is thinner, a funder will either decline the near-100 percent structure or push more of the risk back onto the developer through a larger profit share or a cash contribution. We place each case with the funder type whose appetite fits the scheme, the location and the developer's history.

The trade-offs: profit share, control and guarantees

The appeal of 100 percent funding is obvious, but the cost is real and it is not only financial. On a joint venture the headline trade-off is the profit share, often close to 50/50, which is by far the most expensive way to fund a scheme when it goes well. Alongside that sits control: a JV investor is a partner in the project, so developer decision-making on specification, pricing and timing is shared rather than sole, and the partner will want approval rights over the things that affect their return.

The debt route, stretched senior plus mezzanine, keeps the profit and the control, but it raises the blended cost of finance and almost always requires additional security and a personal guarantee, so a problem on this scheme can reach across to another asset you own. There is no version of 100 percent finance that removes risk; it moves the risk around and puts a price on it.

Where a development exit bridge fits after practical completion

100 percent funding gets a scheme built, but the story does not end at handover. When the scheme reaches practical completion (PC), the build risk has gone and the expensive entry finance, whether a JV or a stretched senior and mezzanine stack, is more costly than a finished, standing asset now warrants. Practical completion is the trigger to refinance onto a development exit bridge, a cheaper short-term facility that repays the development finance and funds the sales period while the units sell.

1. Fund the scheme to 100 percent of costs through a JV profit share or a stretched senior and mezzanine structure with additional security.
2. Build out the site, with build costs and professional fees drawn against the agreed facility.
3. At practical completion, refinance the development finance onto a development exit bridge priced for a completed asset.
4. Repay the exit bridge from unit sales across the sales period, or from a refinance onto longer-term debt where units are held.

Moving onto development exit finance at PC can materially cut the monthly cost of holding the scheme while it sells, and on a JV it can be the point at which the developer buys back some of the upside by refinancing the partner out. We arrange the entry finance and the exit bridge as one connected plan, so the funding runs cleanly from the 100 percent structure at the start to redemption at sale. DevExit is a finance arranger and introducer, not a lender; every figure here is illustrative and not an offer of finance. More on the full range sits on our pillar finance page at /finance/.