Development Finance in Prime London: Kensington, Chelsea and Mayfair
Developing in prime London takes more than a good site. Converting a period house, reconfiguring a mansion block, building on a mews plot or carrying out a heavy refurbishment all need funding that is released in stages as the work progresses. That is what development finance does.
What development finance covers
Ground-up new build: houses and apartment schemes on cleared or infill sites.
Conversions: houses into flats, flats back into single houses, or offices into homes.
Heavy refurbishment: structural works, extensions and reconfiguration, often needing planning or listed building consent.
Light refurbishment: cosmetic works are often better suited to refurbishment bridging, covered in our guide to bridging loans.
How lenders size the loan
Loan to gross development value: most senior lenders cap the loan at around 60% to 70% of the expected value of the finished scheme.
Loan to cost: lenders also limit lending as a share of total costs, so you will normally need to contribute equity.
Staged drawdowns: build costs are released in stages once the lender's monitoring surveyor has signed off the work.
Rolled-up interest: interest is usually added to the loan and repaid on exit, so there are no monthly payments during the build.
What lenders want to see
Your track record, or an experienced professional team if this is an early scheme
Planning permission or permitted development rights in place
A detailed cost plan and programme, ideally with a fixed-price building contract
A realistic end value backed by local comparable sales
A clear exit, either sale of the finished units or a refinance
What is different in prime London
Conservation areas and listed buildings are common across Kensington, Chelsea, Mayfair and Belgravia, so planning can take longer and design is closely scrutinised. Basement and extension works face strict local planning policies. Party wall agreements, construction management plans and access on narrow streets all affect timing, and lenders build these into their appraisal. On the largest schemes, lenders may apply lower leverage, while some specialist and private lenders only start at higher loan sizes.
Ways to structure the funding
Senior debt: the main development loan, secured by a first charge.
Mezzanine finance: a second layer of debt that reduces the equity you need, at a higher cost.
Joint venture equity: a funding partner shares the profit in return for capital.
Development exit finance: a short-term refinance at practical completion, giving you time to sell without paying development rates.
Who we help
Developers, investors, family offices and owner-occupiers carrying out major projects across Kensington, Chelsea, Mayfair, Knightsbridge, Belgravia, Notting Hill, Holland Park and the wider West and Central London market.
Next steps
Planning a scheme in prime London? Use our enquiry form to tell us about your plans. We review your requirements, package the case and introduce you to our specialist broker partner. Our service is free to clients. See how it works.
Kensington Real Estate Finance is an introducer and does not give financial advice. Most development finance is not regulated by the Financial Conduct Authority. Property used as security may be repossessed if repayments are not kept up. This article is general information, not a recommendation.
Kensington Real Estate Finance is not associated with, affiliated with or endorsed by Kensington Mortgage Company Limited (trading as Kensington Mortgages, kensingtonmortgages.co.uk), company number 03049877, registered office Ascot House, Maidenhead Office Park, Maidenhead, SL6 3QQ.
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