Development Finance Services in Cardiff

Senior development finance is the foundation of most property development funding structures in Cardiff and across South Wales. This first-charge facility typically covers up to 70% of your total development costs, providing the core funding to acquire land, cover build costs, and manage professional fees throughout your project.

In Cardiff, senior development finance rates currently range from 7% to 9.5% per annum, depending on your experience level, scheme type, and the specific location within the city. Lenders with active appetite for Cardiff senior lending include specialist development finance houses, challenger banks like Principality Building Society, and the Development Bank of Wales as a co-funder.

Senior facilities are drawn down in stages as your build progresses, with a monitoring surveyor verifying works at each drawdown stage. Interest is typically rolled up into the facility and repaid on exit, meaning no monthly servicing payments during the build period. For Cardiff developers, the availability of Development Bank of Wales co-funding can reduce the senior lender's exposure, sometimes resulting in more competitive pricing.

Stretch senior finance offers higher leverage than standard senior lending — up to 85% of total development costs — from a single lender. This eliminates the need for a separate mezzanine facility, reducing legal costs and simplifying your capital stack. For Cardiff developers, this means faster completion and lower overall funding costs.

This product is particularly popular for mid-market Cardiff schemes valued between £1 million and £5 million, where the additional legal costs of a separate mezzanine layer would disproportionately impact project economics. Developers working on conversion projects in Central Square and new build schemes in Canton frequently use stretch senior facilities.

Rates for stretch senior in Cardiff typically range from 8.5% to 11% per annum, reflecting the higher risk the lender takes compared to standard senior lending. However, when you factor in the savings from avoiding separate mezzanine arrangement fees, legal costs, and intercreditor complexities, stretch senior often delivers a lower total cost of funding.

Mezzanine finance sits behind your senior development loan, filling the gap between senior lending (typically 60-70% LTC) and your available equity. Combined with senior debt, mezzanine can take total funding to 85-90% of your total development costs, significantly reducing the cash equity you need to commit to your Cardiff project.

For Cardiff developers, mezzanine finance is often the difference between being able to proceed with a scheme and having to wait. With equity tied up in previous projects or needed to secure planning on future sites, mezzanine provides the financial flexibility to maintain development momentum. This is particularly valuable in the current Cardiff market, where the pipeline of opportunities in areas like Splott and Dumballs Road rewards developers who can move quickly.

Mezzanine rates in Cardiff range from 12% to 18% per annum, charged on a second-charge basis behind the senior lender. While this is more expensive than senior debt, the blended cost across the entire capital stack remains competitive when compared to the cost of tying up your own equity. The Development Bank of Wales can sometimes serve a quasi-mezzanine role at more competitive rates.

Joint venture equity partnerships provide the ultimate leverage: up to 100% of your total development costs funded, with the JV partner contributing equity alongside senior debt. In return, the equity partner takes a share of the development profit, typically 40-60% depending on the deal structure and developer track record.

For Cardiff developers with strong schemes but limited capital, JV equity unlocks projects that would otherwise be impossible. The Dumballs Road regeneration area, for example, presents multi-million-pound opportunities that smaller developers can access through JV structures. Similarly, larger Cardiff Bay waterfront schemes often benefit from JV equity to maximise the scale of development.

Our JV equity partners are experienced property investors who understand the Cardiff market. They bring not just capital but also expertise, governance, and often valuable contacts within the local supply chain. We structure JV deals that protect the developer's interests while meeting the equity partner's return requirements, creating genuine alignment of incentives.

Development exit finance allows you to refinance your development loan on practical completion, releasing your capital for the next project while any unsold units are marketed. This bridging product is essential for Cardiff developers managing multi-scheme pipelines where equity recycling is critical to maintaining development momentum.

In Cardiff's current market, average sales periods for new build residential units range from 4 to 12 weeks depending on location and price point. Cardiff Bay waterfront properties and Central Square apartments tend to sell fastest, while family housing in Canton and Butetown offers steady absorption. Development exit finance bridges this sales period at a lower cost than maintaining your full development facility.

Exit finance rates in Cardiff typically range from 0.55% to 0.85% per month, significantly below development finance rates. Facilities are available up to 75% of the completed market value, providing headroom for sales negotiations while keeping your cost of carry manageable.

Permitted development finance is specialist funding for conversions carried out under permitted development (PD) rights — typically office-to-residential or commercial-to-residential schemes that do not require full planning permission. Cardiff has significant PD opportunity in the city centre and fringe commercial areas where older office stock is ripe for conversion.

PD schemes in Cardiff benefit from reduced planning risk and typically shorter project timelines, both of which are attractive to lenders. The city centre around Central Square and the commercial areas of Butetown contain multiple buildings suitable for PD conversion, with strong residential demand from young professionals and students providing confident exit valuations.

Funding for PD schemes in Cardiff is available up to 75% of total costs, with rates comparable to standard senior development finance. The key requirement is a valid Certificate of Lawful Development or Prior Approval confirmation from Cardiff Council. We have extensive experience guiding developers through the Welsh PD process, which has some differences from the English equivalent.