Development Finance

You can feel it, can’t you? Confidence is starting to creep back into the market. Plots that sat quietly for months are getting a second look and smaller developers, many of them first-timers, are starting to think bigger.

It’s great to see. But there’s a snag.

Bigger Ambitions, Smaller Support

Over the past year, we’ve seen more first-time developers entering the market, but more recently there’s been a clear shift – many are now looking to take on larger, more complex schemes, moving from single-unit refurbishments to multi-unit builds. With rising build costs and land values, even modest sites are now falling into the £2-4 million bracket.

But while developers are thinking bigger, funding options haven’t quite kept pace. Many lenders are still cautious about backing larger loans for first-time or SME developers, leaving capable teams struggling to get projects moving.

The challenge? Funding hasn’t quite caught up.

While the appetite to build has grown, many lenders remain cautious on higher-value or higher-LTC loans, especially for borrowers without a long track record.

That’s created an underserved segment: capable developers with solid professional backgrounds, viable schemes, and planning uplift but with  limited access to development finance lenders willing to back them.

Larger Loans for Smaller Developers

We’ve recently enhanced our development finance offering to help bridge this gap, now supporting loans up to £4m+, with up to 70% LTV and 90% LTC. It’s built for both experienced developers and those taking the leap into their first full scheme.

The Risk Factor: What’s Holding Lenders Back

Larger schemes naturally mean:

• Higher exposure per project
• More moving parts (contractors, tendering, and cost control)
• Longer build times and more market variables

For first-time developers, that can make traditional lenders nervous. Many prefer to stay within rigid parameters or require heavy personal guarantees that simply don’t work for smaller firms.

The result? Good projects stall but not because they lack potential, but because they don’t fit the box.

Navigating the Market: What Developers Can Do

If you’re looking to take on a larger scheme, here’s what can make the difference when approaching lenders:

1. Show your experience, even if it’s not “development experience”
Project management, surveying, or construction backgrounds all count. Demonstrate your ability to deliver and manage risk

2. Bring in strong professional support
A good QS, development consultant, and contractor network show lenders you’ve thought beyond the concept stage.

3. Evidence planning uplift and costs to date
Lenders increasingly recognise “sweat equity” (the value you’ve already added to a site) as part of your contribution.

4. Be transparent about timelines and contingencies
Delays happen. Having a realistic programme and cost buffer shows you understand the realities of delivery.

5. Work with lenders who know your scale
Mainstream banks may step back, but specialist lenders (like Magnet Capital) can structure facilities around how SME developers actually operate.

How Can Magnet Capital Help?

As confidence builds, so does ambition and rightly so. The UK needs more homes, and smaller developers are often the ones delivering them. The key is finding funding that fits your stage of the journey.

Here at Magnet Capital, we’ve adapted our development finance to reflect these market shifts – supporting loans up to £4m+, with up to 70% LTV and 90% LTC.

We regularly lend to first-time developers who have the right professional background, a solid plan, and the right team around them. Our approach is about understanding the person behind the project, meeting face-to-face, reviewing the scheme in detail, and working collaboratively to structure a facility that works in practice, not just on paper.

To mitigate risk, we recognise planning uplift and equity already created in the site as part of a borrower’s contribution and we stay involved throughout the build, with regular site visits and direct communication between our team and the borrower.

Recent completions include:

• £4.1m facility for nine homes and a commercial unit in Hertfordshire.
• £3.6m facility for first-time developers delivering a farmhouse conversion and seven new builds.

Both projects show that with the right structure and open communication, first-time developers can take on substantial, profitable schemes and we’re here to help make that happen.

If you’re exploring your first large-scale scheme or want to understand what’s possible, we’re always happy to talk it through. Contact us on 020 8075 3255 or fill in our online form,  to find out how we could support your first (or next) development finance project.

93%. That’s how many SME developers say planning delays are their biggest barrier to growth, according to the most recent Home Builders Federation survey.

We all know the story: delays, spiralling costs, and the kind of Kafkaesque circus that makes you want to bang your head against the wall. They say the system is changing, but until then, developers must still navigate it to get much-needed housing delivered.

So, the question remains – do you buy a site with planning, or without?

Buying with planning: the “oven-ready” route

Purchasing a consented site has obvious appeal. You know your costs, GDV, cashflow and funding from day one. You can break ground quickly, avoiding months of waiting while interest accumulates.

But these sites come at a price. Sellers capture the planning uplift, often with ambitious valuations, and competition is fierce. Margins get squeezed, and you may have to work within someone else’s vision for the scheme, making amendments where possible to unlock value.

Buying without planning: risk and reward

Acquiring land without consent brings the immediate headache of the planning system. Local authority processes vary wildly, timelines are unpredictable, and holding costs stack up while interest accrues. In the worst case, you can be left with a site that has little or no development value.

That said, this is where much of the profit sits today. As the saying goes, you make your money on day one. Securing full planning uplift can deliver outsized returns. Many developers over the past 18 months have chosen not to build out at all, but instead to cash in on consent and bank the gain. There’s also the upside of control – shaping the design, density and best use of the site to fit your strategy, not someone else’s.

Structuring deals: the middle ground

Between the two extremes sit option agreements and conditional contracts. These allow you to agree on a price, but only complete once planning is secured. You avoid a hefty upfront outlay and reduce risk, although you may pay a premium for the flexibility and not every landowner is willing to agree. Still, for many SMEs, this can be a smart way to build a pipeline and secure long-term value.

The bottom line

Whether you buy with or without planning depends on your capital, risk appetite, experience and financial strength. Overage agreements must also be observed, as they can eat into future uplifts regardless of how you buy.

What is clear is that with the right team around you, good advice, and a clear plan mapped out, both approaches can work.

How can Magnet Capital help? 

At Magnet Capital, we give property developers the breathing space they need while planning is in the works – covering fees, site costs and keeping your project on track. And because we know things can change, we remain flexible: when new planning comes through, we can adjust the loan to match the updated scheme. That way, you don’t lose momentum while you’re waiting on permissions, and we’re ready to move with you when that stamp of approval lands.

Still waiting on planning? Let’s get the ball rolling anyway – call us on 020 8075 3255 or fill in our online form, and a member of our team will contact you shortly to discuss your development project.

If you’re a property developer, you’ll know the pain. You’ve spotted “the one” – a site with serious potential, but the timing couldn’t be worse. Your cash is tied up in another project, the bank is taking its time, and the thought of stumping up the full purchase price right now makes your wallet weep.

Before you give up and watch someone else snap it up, let’s talk about two property developer lifesavers: Deferred Payments and Option Agreements.

Deferred Payments: The “Pay Later” Button

With a deferred payment, you agree to buy the site but arrange with the seller to pay all or part of the price at a later date. This approach can give you flexibility arranging structured funding, the time to sell another property or free up capital, and/or the ability to crack on with planning or early works without the immediate financial hit. It is even possible to defer to the point of practical completion and use the sales proceeds towards payment.

Basically, it’s about giving your cashflow a break so you can focus on getting the development project moving.

Option Agreements: Holding the Keys Without Owning the Car (Yet)

An option agreement gives you the right (but not the obligation) to buy a property at a set price within a certain time frame. It’s a bit like putting a site “on reserve” – no one else can swoop in, but you don’t have to commit until you’re ready.

Property developers love them because they lock in today’s price while you work up your plans, secure the site without a big upfront outlay, and gives you time to gain planning permission and add value before purchase- without the big gamble, reducing your risk.

How can Magnet Capital help? 

If you’re eyeing up a site but feeling the financial squeeze, call us on 020 8075 3255 or fill in our online form. We’ll help you figure out whether a deferred payment, an option agreement, or another structure is the right move. We’ll also make sure the terms are crystal clear, because how it’s structured can affect your funding, and put you in the strongest position to get building.

Have you ever heard the term “airspace development?” Lately, in the property development industry, this term has been coming up more and more – but what exactly does the term “airspace development” mean?

In a simple manner, the term “airspace development” means that new buildings are built on top of existing structures. It is becoming a major trend in the UK, especially in urban areas, since ground area is becoming more and more limited.

Of course, this type of property development doesn’t come without its challenges. There are many boxes to check regarding the legal status and fine details that need to be solved. It is not as simple as just building a few flats on top of another building. Planning permissions need to be met, air rights must be secured, and a strategy must be implemented to make sure that the original structure can hold the weight of the airspace.

We Took a Little Trip to Old Kent Road…

Our team recently paid a visit to a site on Old Kent Road, where the developer is adding nine new flats above an existing building – a great example of airspace development. Think 7 x 2-beds, 2 x 1-beds and a studio with a view (once the scaffolding’s down).

Why were we there? Well, airspace deals can get a bit fiddly and this one came with its challenges: party walls, multiple freeholds, and overage issues they needed to navigate.

After discussions with our experienced underwriting team, we knew we could provide solutions to not only bypass every obstacle but to address various other factors that had the potential to derail the project for the client too.

This included negotiating 15 party walls and conducting surveys with the top-floor flat owners located directly next to a local pub. A complex overage agreement was also put in place to address overage issues.

Once all that was sorted, we quickly provided a development finance loan of £1.7 million against a Gross Development Value (GDV) of £3.4 million, enabling the developer to begin the project.

Airspace: Not Always Simple, But Makes a Lot of Sense

Sure, airspace development can be a bit of a headache, but it also comes with some pretty major upsides.

In urban areas, especially London, people are always on the hunt to find a place to live, building upwards just makes sense. Airspace allows property developers to make better use of the land –   turning rooftops into much-needed homes and keeping things that are bit more sustainable

These types of projects don’t just address the lack of affordable housing – they breathe new life into tired rooftops and overlooked corners of the city and they turn underused space into homes people actually want to live in. Homes close to the action, with parks, cafés, and transport links just a short stroll away.

We love supporting projects that challenge the norm and rethink how we live. It’s about making better use of what’s already there – and building upwards, not just outwards.

Contact Magnet Capital

We get that no two property developments are the same – especially when it comes to airspace. There are legal hoops to jump through, technical quirks to tackle, and a whole lot of planning in between. That’s why we work closely with our clients from the very beginning, offering honest advice, flagging potential pitfalls, and helping set the project up for success.

With demand for housing on the rise and space at a premium, especially in towns and cities, we expect to see more developers looking up for answers. And when they do, we’ll be here.

If airspace development is something you’re looking to explore, call us on 020 8075 3255 or fill in our online form. We’re always up for turning rooftops into something remarkable.

Ahhhh, the Great British weather. One minute it’s all sunshine and good vibes, the next it’s torrential downpours and mud that could swallow your site manager whole. Which is why we’re here with a gentle reminder: if you’re planning a ground-up development, now’s the time to get moving.

Why the urgency? Because bad weather waits for no one, and wouldn’t you rather be in a hard hat under blue skies than bailing out footings in November storms?

Timing is Everything

Starting your project before autumn and winter really kick in brings some serious benefits:

Dry groundwork: The excavation, foundations, and drainage are much smoother (and faster)

Fewer delays: Weather-related hold-ups can throw your schedule off course

Happier teams: Let’s face it, no one does their best work while battling wind, rain, and a mudslide

Lower risk: From machinery getting stuck, to safety issues, bad weather brings complications you don’t need

Lower costs: Wet soil weighs more, which means fewer tonnes per lorry – and double the haulage bills. Labour can also take longer (see all points above)

Budget Smart

Every delay has a cost. Bad weather can mean extra labour (hello overtime), damaged materials, and extended financing timelines. Starting now could save you a headache, and a hefty invoice, later down the line.

Magnet Capital’s Forecast: Clear Skies (If You Start Soon)

We specialise in funding ground-up developments – it’s actually 80% of what we do, and we’ve helped hundreds of developers across the UK navigate every kind of site and season. Need quick decisions? Flexible terms? A lender who will come down to site and share your vision in person? That’s us.

We also provide a day one release to help get your project off the ground quickly, and we fund up to 100% of the build costs through stage payments. To keep things moving smoothly, we will use the same surveyor throughout the project and we can release funds within 48 hours of their visit to site.

Contact Magnet Capital

So, grab your project plans, ring your contractor, and let’s get that dream build on the go. Because the only thing worse than a wet site is watching your timeline (and profits) wash away with the November rain.

If you’d like to discuss a ground-up development project, call us on 020 8075 3255 or fill in our online form and someone from our team will be in touch with you shortly.

Thinking about jumping into property development? Maybe you’ve watched a too many episodes of Grand Designs or have always wanted to build your dream family home? Either way, if you’re thinking about going into property development, this blog’s for you.

What to Expect as a New Property Developer

If you’ve never developed before, here’s the short version:

1. Find a site
2. Make a plan (bonus points for actual floorplans)
3. Get planning permission
4. Build stuff
5. Sell, rent or move in

But before you dive headfirst into the world of property development, there are a few things you should know. First: it’s not a get-rich-quick scheme. Property development takes time, patience, and a fair bit of hard work. You’ll almost certainly face unexpected challenges and setbacks along the way, but don’t let that put you off.  With determination and a solid plan, becoming a successful property developer can be incredibly rewarding.

5 Tips for Your First Project

As a lender who has successfully secured funding for multiple projects, we can tell you that property development it’s not an easy task, but definitely not impossible. With determination and the right approach, you’ll be on your way to making your project a reality.

1. Plan like you mean it

The more you know about your site, your build costs, and your dream kitchen tiles, the better. Lenders love details.

2. Don’t fudge the numbers

Be honest about your budget.

3. Pick the right partners

Good builders, good architects, and a lender who can work to your parameters. (We cover picking the right partners in more detail here)

4. Grab Your Paperwork

It’s boring but necessary. Get your permissions, plans, and any previous property experience ready – don’t worry if you don’t have any, we can still help.

5. Get the right funding

We can definitely help here.

How Can Magnet Capital Help?

We’ve helped loads of first-time developers navigate their first project -we’ll even walk you through it (literally- we love a site visit).

As an example, we recently helped a client who was a first-time developer with no hands-on construction experience. They wanted to build a 4-bed detached home from scratch on family-owned land. Understanding that the client was new to development finance, we took time to clearly explain every stage of the funding process – from what to expect during the legal phase, to how valuations are conducted, and how to manage staged drawdowns effectively. The client was given direct access to both a BDM and underwriter, ensuring open, responsive communication throughout.

In the end, we provided a total facility of £246,000, which included:

• 100% of the build costs covered
• 47% loan-to-GDV overall
• £55,000 released on Day 1
• Flexible support that allowed us to increase the Day 1 drawdown to suit the project needs

The result? A high-quality family home, now on the market and the client is already moving ahead with their next project, funded once again by Magnet Capital.

New to development finance and not sure where to start?

Don’t worry, you’re in good company. Whether you’re planning your first build or just Googling “what even is a drawdown?”, here are a few questions we get all the time:

Can I get funding with no experience?

 Yes! (We’ll just want to see you’ve got a solid plan and some good people around you.)

How much deposit do I need?

 You’ll need some funds to pay for the upfront legals and surveying work.

How fast can you decide?

Within 24 hours.

Is it really this simple?

 We can’t speak for other lenders but with us – yes.

Contact Magnet Capital

Every property pro was a first timer once. But before you grab that hard hat and high-vis jacket, let’s have a chat. Even if you just want to check if your idea has potential – we’re happy to talk you through it.

If you’re  ready to talk through funding for your first development project, call us on 020 8075 3255 or fill in our online form and someone from our team will be in touch with you shortly.

The latest Stamp Duty shake-up kicked in from 1st April 2025 (sadly, this was not an April Fools’ joke) and while it may not have grabbed the front pages, for property developers the financial implications are not to be underestimated. And while it’s not devastating, it’s definitely not the helpful, hands-off HMRC moment we were all hoping for in Q2.

What’s changed? And more importantly – how do we go from here?

As of the 1st of April:

• The nil-rate band has shrunk from £250K to £125K.
• First-time buyer relief has been trimmed and only applies up to £300K (down from £425K)
• The maximum property value eligible for first-time buyer relief is now set at £500,000 (down from £625,000)
• The surcharge for purchasing additional residential properties, such as buy-to-let investments or second homes, has increased from 3% to 5%
• HMRC is also cracking down on all the creative ways people tried to wiggle around Stamp Duty in the past

In short: if your strategy involved buying a block, converting a house into flats, or snapping up portfolios, expect to pay more upfront in Stamp Duty (SDLT).

What This Means If You Develop Property for a Living

Let’s be honest, developing property isn’t for the faint of heart at the best of times. And now? You’re dealing with rising build costs, slower sales, and stamp duty that’s acting like it wants a stake in your company.

With the SDLT changes in effect, acquisition costs have gone up. Whether you’re buying land, flipping units, or building to rent, the squeeze on margins is real. But you’re not alone and this isn’t unmanageable. It’s just time for sharper planning and a little creative thinking around pricing and value-add.

The pace of the market has also shifted. If the first quarter felt like a scramble, it’s because many buyers were racing to complete before the deadline. That rush has passed, and things are naturally levelling out and it’s not a downturn – just a breather to give you space to reassess and refine your next steps.

So, What Now?

For UK property developers working at speed or scale, that extra SDLT can hit where it hurts – especially when you’re already juggling build cost inflation, planning delays, and that one neighbour who objects to everything but now that the dust has settled (and HMRC has made itself very clear), it’s time to adjust the game plan:

1. Re-run your numbers

This is also a good time to revisit the numbers. Margins, timelines, contingencies – they all deserve a second look. It’s not panic stations; it’s just making sure your projects are still running lean, smart, and ready to weather whatever’s next.

2. Check your funding structure

 If that SDLT hit has squeezed your capital, development finance could help cover gaps or smooth cash flow.

3. Talk to your advisers

This is not the time for guesswork or Googling. Your solicitor and tax advisor can help identify compliant structuring options, especially where there are commercial and residential elements.

Rest assured, a little recalibration now will go a long way in helping you stay confident and competitive in a changing market.

How Magnet Capital Can Support You

In a market where margins are tighter and planning needs to be sharper, developers need more than just finance – they need a partner who understands the full picture.

We work closely with developers to make sure projects are viable from day one. That means being fast, flexible, and realistic about what’s needed – not just in terms of capital, but in terms of support, strategy, and timing.

Our role is to provide finance solutions that match the way you work – even when the rules change. We’ve already helped clients navigate the impact of these changes, from reassessing loan requirements to structuring deals that still deliver.

If you’re a property developer looking for clarity or flexibility in your funding, our team is here to help. Call us on 020 8075 3255 or fill in our online form and someone will be in touch with you shortly.

In football, even the best strikers can’t win a match alone – they need a strong team around them to create opportunities and provide support. And the same goes for property development. While your vision and ambition are what drives the project, having the right team of experts in place to drive it will make for a more successful result.

Every position on your team plays a vital role in ensuring the development runs smoothly. From your architects and planners to your funding line and contractors, they will ensure challenges are overcome efficiently and within budget.

Who Should Be in Your Development Dream Team?

 

1. An Experienced Architect & Planning Consultant

You want an architect who gets your vision but also adds their own perspective, while making sure that your plans are compliant with local regulations. For help with planning, a local planning consultant will help guide you through any complex laws – increasing the chances of approval.

2. A Skilled Contractor & Project Manager

A skilled and trusted contractor will ensure your development is built on time, within budget, and to the highest standard. Meanwhile, a strong project manager will keep everything running smoothly, mitigating risk and handling the day-to-day challenges to prevent any costly delays

3. A Strong Legal Team

From site acquisition to JV agreements and planning permissions, a specialist property solicitor will give you peace of mind that every legal aspect of your development is covered – streamlining the process by managing contracts and handling any potential disputes.

4. A Specialist Finance Broker

A highly rated specialist broker ensures you secure the right funding for your project. With development finance being more complex than traditional mortgages, a specialist finance broker is well-versed on lender requirements so will negotiate the best terms and know how to structure your application effectively.

5. A Reliable Lender

A development finance lender that understands the challenges, offers flexibility when required, and delivers quick decisions is crucial. Delays in funding can be costly, so working with a lender who prioritises speed and certainty will keep your project on track.

How the Right Lender Made the Difference

This was clear when we were recently approached by a broker whose client was a first-time developer. They had identified a site they were eager to develop but through our early-stage analysis, we identified that the project lacked the necessary profit margin to make it a viable investment for the client.

Rather than push forward with a deal that wouldn’t serve the client’s best interests, we explained the potential risks to the client and his broker. Determined to pursue their first development, the client found a new opportunity – a single three-bedroom detached home with stronger ROI.

Now that the client had secured a more suitable site for a first-time developer, we worked closely with them and provided a 12-month loan facility, covering 55% of the GDV (plus rolled-up interest), 100% of the build costs, and 50% of the day-one purchase amount, with a total loan facility of £275,000 and a day-one loan amount of £75,000.

Choosing a lender who could immediately identify potential issues in their initial project and guided them toward a more viable project, helped them secure a site better suited to their experience.

With the right finance, legal, and construction team in place, the three-bedroom family home was completed within nine months, and the property is now on the market for £625,000. What’s more, the client is now NHBC accredited – a testament to the success of their first development project.

Why the Right Team Matters

Property development is a fast-moving, high-stakes industry where one weak link can lead to setbacks but with the right broker, lender, legal team, architects, and contractors, you’re putting your project in the best position.

Whether you’re a seasoned property developer or taking on your first project, surrounding yourself with a strong, experienced team will help you stay on track, overcome obstacles, and achieve the best possible outcome.

If you’re looking for a development finance lender who works with you, not against you, let’s talk: hello@magnetcapital.co.uk or 020 8075 3255.

In today’s fast-growing market, it can be difficult for property investors to maximise potential. If you’re considering diversifying your portfolio in 2025 – looking beyond the city centres is an opportunity worth seizing.

With rising demand for countryside living and strong returns on investment, rural property projects are becoming an increasingly attractive prospect.

Potential for Significant Growth

In fact, rural house prices have outpaced urban areas over the past 5 years . According to data from nationwide, between December 2018 and December 2023 house prices in predominately rural areas increased by 22%, compared with 17% in urban areas.

And experts say this demand will only increase – with rural house prices predicted to rise a further 4% this year.

With potential for such significant growth, it’s no wonder rural opportunities are becoming a popular choice among property developers. At Magnet Capital, we’ve certainly noticed an increase in enquiries for rural projects – funding for barn conversions, new-builds, and eco-friendly homes has risen steadily, as more developers tap into opportunities presented by the rural property market

We’ve noticed that enquires for barn conversions in particular have increased in recent weeks. This surge in interest is not surprising, as these types of properties can command a premium price, particularly in sought-after locations such as the Cotswolds, Southwest England, and the Lake District.

However, while the finished product can be spectacular, the process of converting an agricultural building into a residential property is anything but simple.

From planning complexities to securing the right funding, barn conversions require patience, and financial backing that is as flexible as the project itself is crucial.

The Barn Conversion Process

Unlike new builds, barn conversions are dictated by the constraints of the existing structure. That means developers must work within the limits of planning laws, structural integrity, and heritage considerations.

The process typically involves:

• Planning & Permitted Development Rights (PDR): some agricultural buildings can be converted under Class Q permitted development rights, removing the need for full planning permission. However, local authorities often impose strict conditions, and Article 4 directions can block PDR in certain areas
• Structural Considerations: Barns weren’t built for living. Many structures require substantial modifications to comply with building regulations
• Access Challenges: many barns are in remote locations, meaning mains water, drainage, and electricity may not be readily available
• Maintaining balance: There must be balance between maintaining the original features and integrating modern insulation, heating, and glazing to meet today’s energy efficiency standards

The Key Challenges

1. Funding

Barn conversions are inherently unpredictable, which many lenders see as a risk. Unlike traditional new-build developments, conversions don’t fit neatly into standard lending models. This creates barriers for developers looking to secure finance.

2. Planning

Even with PDR, local planning officers can impose strict conditions and there’s no guarantee that approval will  even be granted. Many lenders take a conservative stance, reluctant to finance a project until all planning and structural reports are in place.

3. Costs

Barn conversions often reveal hidden costs mid-build. Traditional lenders rarely accommodate for unforeseen expenses, leaving developers scrambling for additional funds.

4. Exit Strategy

Many high street banks and traditional lenders worry about the resale potential of rural properties, leading to restrictive lending criteria and reduced loan-to-value (LTV) ratios. For developers, this can mean limited borrowing power—even when the project is fundamentally viable.

Support is in the Right Place

At Magnet Capital, we understand the intricacies of barn conversions and will work with you to structure your barn conversion loan to align with your project’s needs, even if unexpected costs arise partway through.

For example, we recently funded a development project for a client who wanted to transform a derelict barn in Somerset into a stunning, high-specification rural retreat.

Initially, we provided a loan of £250,000 to support the development. However, midway through the project, the client recognised an opportunity to significantly increase the property’s sale value from circa £850,000, by converting the dormer space in the roof.

Believing in our client’s ambition and the potential value of their project, we worked closely with them to ensure they had the necessary capital to enhance the build and swiftly approved a £200,000 increase in their facility within hours. The client was then able to deliver the project on time and the additional funding enabled the expansion of the living space, significantly boosting the sale value (est. £1.5m).

A Smart Investment

For property investors, barn conversions offer a unique blend of character, demand, and profitability. Whether as a high-value resale project, a luxury rental, or an eco-friendly rural retreat, they provide diverse and scalable investment potential.

At Magnet Capital, we’re committed to helping property developers unlock the potential in barn conversions – not just by providing finance, but by being a trusted partner through every stage of the journey.

If you’re considering a barn conversion for your next project, let’s talk: hello@magnetcapital.co.uk or 02080753255.

The UK property development market is rarely predictable. After a turbulent few years, 2024 offered a degree of relief, with two interest rate cuts from the Bank of England (BoE), helping to ease financial pressures and fostering growth in the property sector. But as we navigate through January 2025, the property development landscape has once again shifted – presenting both challenges and opportunities for developers.

Inflation may be slowing, and borrowing conditions are improving, but these factors alone don’t guarantee smooth project delivery. If there’s one thing developers need in the current market, it’s flexibility—both in funding and in their ability to adapt to changing conditions.

2024 vs. 2025: The Changing Reality for Developers

Last year, many developers were cautiously optimistic. Interest rate reductions created breathing room, and for some, projects that had stalled due to financial constraints were able to move forward. But despite this, fundamental challenges remain in 2025:

• Planning system delays continue to stall developments: local authority bottlenecks remain a huge issue, with even straightforward applications taking longer than ever
• Build costs are unpredictable: while material prices have stabilised somewhat, labour shortages and contractor pressures highlight the need for adaptable budgeting
• Buyer demand is shifting: higher mortgage rates have changed affordability for homebuyers, and developers need to be agile in responding to what the market wants

Yet, one of the biggest challenges developers are facing currently isn’t market conditions—it’s access to finance.

January 2025: Navigating the Challenges

In theory, lower interest rates should have made borrowing easier. In reality, however, funding conditions this month have been far from straightforward. Many high street banks remain reluctant to lend at pre-pandemic levels, while some alternative lenders have pulled back, re-evaluating their risk appetite in the face of ongoing market uncertainty. The challenges in obtaining finance have been particularly pronounced for small and medium-sized enterprise (SME) housebuilders. According to the Home Builders Federation’s latest State of Play survey, 32% of SMEs that build 1-10 homes a year said access to development finance was a major barrier to growth, compared to 14% of those that build over 100 homes a year.

Developers are encountering a range of funding challenges, including:

• More restrictive lending criteria: many lenders have tightened their affordability and viability assessments, making it harder to get projects funded – especially for those with non-standard schemes or larger borrowing requirements
• Delays in decision-making: some developers have faced significant delays in getting funding approved, holding up progress at a time when speed is critical
• Limited appetite for new lending: some lenders have reduced their loan books, leaving developers scrambling for new sources of funding

For developers, this means one thing: a rigid, inflexible lender could stall or even derail a project.

Why Flexibility in Development Finance Matters Now More Than Ever

Property development is never a straight line from start to finish. Unexpected issues arise, whether that’s a delay in securing planning, a contractor going under, or a shift in exit strategy due to changing market conditions. Lenders who offer rigid, one-size-fits-all products will struggle to meet the needs of today’s developers.

A flexible finance partner can make all the difference. That means:

• Funding structures that adapt to real-world challenges: developers need lenders who can adjust terms when unexpected delays occur, rather than penalising them for circumstances beyond their control
• Speed in decision-making: delays in funding can be just as damaging as delays on-site. A lender who moves quickly can keep projects on track
• A pragmatic approach to exit strategies: market conditions in 2025 will continue to evolve, and developers need finance partners who can support refinements to sales or rental strategies as required

2025: A Year for Agile, Strategic Development

Despite the challenges, 2025 presents significant opportunities for developers who can adapt. Housing demand remains strong, but the key to success will be working with partners – whether that’s lenders, planners, or contractors – who understand the sector’s realities and can respond accordingly.

Rigid financial structures belong to a past market. In today’s climate, development finance needs to be as dynamic as the sector itself.

How Magnet Capital Stands Apart

For developers, these uncertainties make one thing clear: funding alone isn’t enough – it’s about having the right type of funding. Having a lender who understands the challenges of the sector and can offer pragmatic, adaptable finance is essential.

At Magnet Capital, we’ve always positioned ourselves as a partner, not just a lender. Our team work alongside developers every day, giving us insight into the challenges on the ground, adjusting funding structures, repayment terms, and even exit strategies to keep projects moving forward.

You’re not dealing with an algorithm or a tick-box underwriting process – we move quickly because we understand time is money and delays in funding can kill momentum on a project.

As developers look ahead to the coming months, those who prioritise flexibility – both in their project approach and their funding – will be best placed to succeed.

For more information on how Magnet Capital can help fund your next development project, contact us on 020 8075 3255 or hello@magnetcapital.co.uk.