Development exit finance

Who can borrow and what lenders look for

Development exit lenders underwrite a completed building and a credible lease-up, rather than a construction programme, so the case rests on the finished asset and the income it is building toward. They want practical completion confirmed, a clear value for the finished scheme, and evidence that the lease-up is progressing or will progress at the rents assumed, supported by the wider market: CBRE put stabilised UK multifamily occupancy at around 97 percent in September 2025, and Knight Frank recorded UK private-rented-sector rental growth of around 4 percent for the year, both of which support a lender's confidence in the lease-up. Because the construction risk has gone, they will lend at a higher loan to value and a lower rate than the development facility being repaid, and they will look at how much equity is trapped in the scheme and how the developer intends to release and use it. A first-time developer can access development exit finance, because the hard part, building the scheme, is done, and the lender is funding a finished asset. They will still want a sensible lease-up plan and a clear onward refinance or sale. We assemble the completion evidence, the value and the lease-up case so the lender can see a finished asset on a clear path to a stabilised rent roll and a long-term refinance.

How much you can borrow

Development exit finance is sized on the value of the finished scheme and the income it is leasing up toward, so the achievable loan keys off the completed asset rather than the construction cost and gross development value a development loan worked to. Because the construction risk has gone, lenders advance at a higher loan to value than a development loan to GDV, typically up to around 70 to 75 percent of the completed value, which is often enough to repay the development finance in full and release equity that was trapped in the scheme. The value is set by the net operating income the stabilised rent roll will produce, capitalised at an investment yield, so the yield matters even during lease-up: Knight Frank put Tier 1 regional city prime multifamily at around 4.50 percent in September 2025, and a keener yield lifts the completed value and so the loan. During lease-up the income is still building, so the facility is sized with that ramp in mind, with interest serviced or part-rolled until the rent roll catches up. We model the completed value, the loan to value, the equity release and the onward refinance together, so you can see how much the development exit facility frees up now and what the long-term investment facility looks like once the scheme stabilises.

Rates and costs

The whole point of development exit finance is that it costs less than the development finance it repays, because the construction risk has gone and the lender is funding a completed asset. The rate is indicatively below development finance, a margin over SONIA reflecting a finished building in lease-up rather than a building site, which on a typical scheme can save a meaningful sum over the months it takes the rent roll to stabilise. Expect a lender arrangement fee of around 1 to 2 percent, a valuation on the completed asset, legal fees for both sides, and on the development loan being repaid any exit fee or early repayment charge, which should be weighed against the saving the lower rate delivers. Because the facility is meant to be temporary, carrying the scheme through lease-up, the total cost is driven by how long the scheme takes to stabilise, so a faster lease-up onto long-term investment finance saves money. We disclose our broker fee in writing, compare the cost of the exit facility against staying on development finance and against the onward investment refinance, and never claim an exclusive tie to any lender.

Development exit, development finance or investment finance

Development exit finance is the right product at the moment a scheme reaches practical completion but has not yet stabilised. It sits between development finance, which funds the construction and is priced for construction risk, and long-term investment finance, which holds the stabilised asset and is sized on net operating income. Once the build is done, staying on the development loan is expensive, and the scheme cannot yet support investment finance because the rent roll has not stabilised, so a development exit facility repays the development loan at a lower rate and carries the scheme through lease-up. Once the rent roll stabilises, the exit facility is refinanced onto investment finance, the cheapest debt in the scheme's life. Used in sequence, development finance builds the scheme, a development exit facility carries it through lease-up, and investment finance holds it long term, each step cheaper than the last. We position the scheme on that path and arrange the exit facility as the bridge between construction debt and permanent debt.