Funding Options for UK Property Developers in 2025

The UK property development landscape in 2025 continues to evolve, shaped by macro-economic shifts, regulatory changes, and investor appetite. For developers, choosing the right funding route is critical to ensuring profitability, project success, and long-term growth.

At PropFundrs, we specialise in helping developers navigate this complex terrain with tailored funding strategies. Below, we break down the most relevant property funding options available in the UK for property developers in 2025.

1. Senior Debt Finance

Best for: Established developers with strong track records and a clear exit strategy.

Senior debt remains the most common funding route, typically provided by banks and specialist lenders. In 2025, rates have stabilised after recent volatility, with many lenders offering loan-to-value (LTV) ratios between 60% and 75%.

Pros:

• Lower interest rates compared to mezzanine or bridging finance

• Ideal for large-scale developments

Cons:

• Rigid criteria

• Slower approval processes

  
  

  

2. Mezzanine Finance

Best for: Developers needing to top up senior debt without diluting equity.

Mezzanine finance sits between senior debt and equity, allowing developers to borrow more without losing control of their project. Interest rates in 2025 typically range from 10% to 15%, depending on risk and security.

Pros:

• Boosts total borrowing capacity

• Preserves equity

Cons:

• Expensive compared to senior debt

• Lenders may require a profit share

  
  

3. Bridging Loans

Best for: Short-term projects or fast acquisitions.

With faster completions (often within 2–3 weeks), bridging finance is popular in 2025 among developers needing quick access to capital. It's typically used to secure land or refurbish properties before refinancing or selling.

Pros:

• Speed of execution

• Flexible terms

Cons:

• High interest rates (typically 0.8%–1.2% per month)

• Short repayment terms usually with steep penalties if the loan term is exceeded

4. Development Finance

Best for: Ground-up construction and major refurbishments.

Tailored for property development, these loans cover build costs and sometimes land purchase. Most lenders in 2025 offer development finance up to 70% of GDV (Gross Development Value) or 90% of total costs, subject to appraisal.

Pros:

• Purpose-built for developers

• Staged drawdowns to support cash flow

Cons:

• Complex application processes

• Requires detailed costings and planning approval

5. Joint Venture (JV) Funding

Best for: Developers lacking sufficient capital and/or experience but with potentially profitable projects.

In 2025, JV structures are increasingly popular, especially among developers with strong pipelines but limited funds. A JV partner (often a private investor or fund) provides equity in return for a share of the profits.

Pros:

• No monthly repayments

• Risk is shared

Cons:

• Profit-sharing reduces your returns

• Potential conflicts in decision-making from JV partners’ overreach

6. Peer-to-Peer (P2P) and Crowdfunding

Best for: Small-to-mid-sized projects and newer developers.

P2P lending and crowdfunding platforms have matured significantly by 2025. While still risk-sensitive, some offer up to £5 million for residential and mixed-use schemes, with competitive rates.

Pros:

• Accessible and fast

• Innovative structures

Cons:

• Limited availability for large projects

• Higher scrutiny from platforms and investors with FCA oversight

7. Government and Local Authority Grants

Best for: Projects with social impact, sustainability goals, or urban regeneration objectives.

Several schemes — including the Levelling Up Fund, Homes England support, and regional development grants — remain active in 2025. These can supplement other financing or reduce upfront costs.

Pros:

• Non-repayable or low-cost support

• Improves project viability

Cons:

• Competitive application process and Limited Availability

• Time-consuming due diligence

  
  

Key Considerations

• Project size and type: Not all lenders or funding types are suitable for every development.

• Experience and track record: More complex funding (e.g., JV or mezzanine) typically requires demonstrable success.

• Planning status: Pre-planning or conditional projects may face reduced loan-to-value ratios or higher scrutiny.

• Exit strategy: Be clear about whether you'll sell, refinance, or hold the asset — this directly impacts lender appetite.

Conclusion - Funding Options for UK Property Developers

The funding ecosystem for UK property developers in 2025 is broad, but it demands strategic thinking. With interest rates relatively stable and more lenders returning to the market post-2023 volatility, developers have more options than ever — but also more due diligence to perform.

Need help exploring your funding options? Whether you're acquiring land, breaking ground on a new build, or refurbishing a period property, informed decisions today can lead to greater profits tomorrow.  With PropFundrs expert knowledge of the funding market doors may open to bespoke structures, private lenders, or joint venture partners that you might not find independently.  Why not get in touch to see what options are available to you?