No deposit? Fund your next project with 100% development finance

No deposit? Fund your next project with 100% development finance
No deposit? Fund your next project with 100% development finance

You may be ready to move onto your next development but have no deposit available to invest in the project. This could be because you are still in the process of selling properties for a completed project or you already have various projects in motion. This is when 100% development finance, also known as joint venture development finance, can help overcome that obstacle.

What is joint venture development finance?

This type of funding allows you to develop property without having to invest any of your own funds. The lender provides 100% of the funds needed for the entire project, including the site purchase and the build costs. Once your project has been completed and the development is sold, the profit is split between you and the lender.

How does it work?

To agree to 100% funding, the lender will want to see a substantial return on their investment. A profit margin of 25–30% is typically accepted. Usually, lenders only consider development projects with a gross development value (GDV) of at least £1 million. You need to be an experienced developer, have planning permission in place and provide a personal guarantee.

Some lenders charge interest on the loan and this is usually rolled up to be repaid when your development is sold. As the lender is funding your entire development project, they will expect a large percentage of your profit, such as 40%. Other lenders prefer to take a larger share of the profit instead of charging interest.

A special purpose vehicle (SPV) is usually set up to hold the asset. This is a limited company, which is typically owned by the lender.


Due to the risk and level of funding required by the lender, you need to fulfil specific criteria to be successful when applying for joint venture development finance.

  • You must be an experienced developer. The lender needs to be sure you have experience with a similar type of development to the one you are seeking finance for. For example, the lender won’t agree to 100% development finance for a project to build 20 flats in Bexleyheath when you have previously only been involved with a project to build five flats in Bexley.
  • You need to have full planning permission for your development project. It’s essential to have the planning permission in place before you make your application for the finance as the lender won’t be prepared to take any risk in this aspect.
  • You need to provide a personal guarantee. This differs between lenders but a personal guarantee capped at 20% is often accepted.
  • There needs to be a strong return on the investment. Lenders usually only consider projects with a GDV of at least £1 million and a profit margin of 25–30%.
  • You must be able to show that there is a significant demand for the development. Lenders offering 100% finance tend to prefer multiunit new-build developments, family housing and conversions. Not only is there a strong demand for these property types but they also yield high profits.
  • The development must be located in a good area. This goes hand in hand with the above requirement. A desirable location, such as London or Edinburgh, helps with the saleability of the development.

The advantages of joint venture development finance

There are many benefits to using this type of funding for your development project:

  • You can proceed with a project even if you have little or no deposit to invest.
  • The land acquisition and build costs are funded 100% by the lender.
  • It allows you to develop quickly without tying up any of your capital.
  • It removes the worry of raising funds for each stage of your development project.
  • If interest is charged, it is usually rolled up so you don’t have to service the debt.
  • The profit is usually split in your favour.

Alternative funding options without a deposit

If you would prefer not to profit share, there are other options to consider if you don’t have a deposit to invest. One option is to provide additional security in the form of another property, or properties, such as your home, investment properties or a development that you haven’t sold yet.

Another option is to release equity that’s tied up in your home or other properties. This can be done by remortgaging, taking out a short-term loan, such as bridging finance, or opting for a secured loan. The equity can then be used as your deposit.

You could also get a private investor on board and make a joint application for development finance. The investor would supply the deposit that you are unable to.

In some cases, you may be able to secure 100% finance for a site that can be purchased under the market value and refurbished. An example of this is to agree on a price with the seller of a plot of land that doesn’t have planning permission. You would then arrange finance with the lender once you have obtained planning permission and the land’s value has increased.

Discuss your financing requirements with an expert

Speak with your qualified broker for expert advice on each funding option available. He or she will assess the details of your development project and ascertain which finance route is the best one to take based on your situation and needs. Working closely with specialist lenders, your broker can then approach the best ones for your case and negotiate on your behalf to secure the optimum deal for you.

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