First-Time Developer's Guide

Yes, absolutely. While lenders naturally prefer developers with a proven track record, first-time developers can and do secure development finance. The key is understanding what lenders look for and positioning yourself to meet their criteria.

Lenders assess first-time developers more carefully, and you may face slightly higher rates or lower LTC ratios on your first project. However, the fundamental principle remains the same: if the scheme is viable and the risk is manageable, there is a lender on our panel who will fund it.

We have helped many first-time developers in Hackney secure funding for their debut projects, from single-unit conversions in Hackney Wick to small multi-unit schemes in Shoreditch. The experience we have gained through these transactions allows us to guide you through the process with confidence.

One of the most important things a first-time developer can do is assemble a strong professional team. Lenders take significant comfort from seeing experienced professionals around an inexperienced developer. Your team should include:

An Architect with experience in your project type and familiarity with Hackney planning requirements. They will produce the designs and manage the planning application.

A Quantity Surveyor (QS) who will prepare a detailed build cost breakdown. This is essential for the lender's assessment and for managing your budget during construction.

A Contractor with a demonstrable track record in similar projects. Some lenders require a fixed-price building contract with a reputable contractor, particularly for first-time developers.

A Solicitor experienced in development finance transactions. Development finance documentation is complex and requires specialist knowledge.

A Project Manager (if you are not managing the build yourself) to coordinate the construction programme and liaise with the Monitoring Surveyor.

We can introduce you to trusted professionals in each of these categories who operate regularly in Hackney.

Your first development project should be carefully chosen to maximise your chances of success while building the track record you need for future, larger schemes.

Start with a manageable scale. A single-unit conversion or a 2-4 unit scheme is ideal for a first project. This limits your risk exposure while giving you practical experience of the development process from start to finish.

Choose a straightforward project type. Light-to-medium refurbishment projects are often ideal for first-time developers because the building already exists, reducing construction risk. In Hackney, Victorian and Edwardian properties in areas like Stoke Newington and Hackney Wick offer excellent conversion opportunities.

Secure planning before approaching lenders. Having full planning permission in place significantly reduces risk in the lender's eyes and will result in better terms. For first-time developers, this is particularly important.

Be conservative with your numbers. Underestimate your GDV slightly and overestimate your costs. This gives you a buffer against the unexpected and demonstrates to lenders that you are realistic and prudent.

Lenders assessing first-time developers focus on several key areas:

Relevant experience: You may not have developed property before, but do you have relevant experience? A background in construction, architecture, surveying, project management, or property investment all count positively. Even experience managing significant renovation work on your own home can be relevant.

The strength of your team: As discussed above, surrounding yourself with experienced professionals significantly mitigates the risk of your inexperience.

Scheme viability: Is the project commercially viable with a healthy profit margin? Lenders typically want to see a minimum profit on cost of 20% for the project to be considered.

Skin in the game: Your equity contribution demonstrates your commitment. For first-time developers, some lenders may require a higher equity contribution, perhaps 35-40% of total costs rather than the standard 30%.

Exit strategy: How will the loan be repaid? For residential schemes, this is usually through unit sales. The lender will want to see that comparable sales evidence supports your GDV and that there is sufficient demand in the local market.

First-time developers commonly make several mistakes that can derail their projects or their finance applications:

Underestimating costs is the most common and most dangerous mistake. Build costs in Hackney are significant, and contingencies of at least 10% should be included in your budget. Do not forget to include professional fees, finance costs, and selling costs in your appraisal.

Overestimating GDV can make a scheme look viable on paper when it is not in reality. Use conservative comparable evidence and avoid cherry-picking the highest sales in an area.

Ignoring planning risk by purchasing a site before securing planning permission. This is particularly risky in Hackney where planning requirements vary significantly between areas. Always understand the planning position thoroughly before committing.

Choosing the wrong contractor, either on price alone or without proper due diligence. A contractor going bust mid-project is one of the worst things that can happen to a development. Check references, review accounts, and ensure they are adequately insured.

Not allowing enough time for the finance process. From initial enquiry to drawdown, development finance typically takes 4-8 weeks. Factor this into your project timeline, particularly if you are purchasing at auction or have exchange deadlines.