How much deposit for development finance?

A development finance deposit is the cash a developer contributes to a scheme alongside the lender's facility, and it is set by the gap between the loan and the total project cost. Because development finance is sized by loan to cost and loan to gross development value rather than a simple percentage of price, the deposit is best understood as your day-one equity. We arrange development finance for logistics and industrial schemes across the UK, and as an introducer rather than a lender we model the equity requirement before approaching the market so there are no surprises.

This guide explains how much deposit you need for development finance, how it differs from a buy-to-let deposit, how much you can actually borrow against a scheme, and how achievable development finance is for first-time and experienced developers. We work through the figures on a logistics scheme to show where the equity goes, and we set out the levers that can reduce the cash you need to put in. The aim is that a developer can look at a project and understand the true day-one cash requirement before committing to the land.

How much deposit do I need for development finance?

The deposit you need for development finance is the difference between the lender's facility and the total cost of the scheme, which usually means contributing twenty-five to thirty-five percent of the project cost from your own resources. On a logistics scheme costing five million pounds funded at seventy percent loan to cost, the facility is three and a half million pounds and your day-one equity is one and a half million pounds. That cash is weighted towards the land, because the lender typically expects you to fund the site purchase before construction money flows.

The reason the figure is expressed against cost rather than price is that development finance is sized by two ratios. The loan to cost ceiling sets how much of the total spend the lender will fund, and the loan to gross development value ceiling caps the facility against the finished value. The lender lends to whichever produces the lower number, so on a scheme with a thin margin the loan to GDV test binds first and the deposit you need rises accordingly.

The deposit is not the only cash required at the outset. A lender charges an arrangement fee, there are valuation and legal costs, the monitoring surveyor's fee, and our own fee as the arranger, all of which sit on top of the equity. We model the full day-one cash requirement before you commit, because an equity figure that looks affordable can become tight once fees and costs are added, and knowing the true number early stops a scheme stalling at the wrong moment.

Is development finance always a 25 percent deposit, like buy-to-let?

No. A buy-to-let mortgage is usually quoted as a flat deposit against the purchase price, commonly twenty-five percent, because the lender is funding a finished, income-producing property and the arithmetic is simple. Development finance does not work that way. The deposit is set by loan to cost and loan to gross development value applied to a scheme whose value changes through the build, so the equity requirement is a calculation rather than a fixed percentage.

In practice the day-one equity on a development scheme often lands somewhere between twenty-five and thirty-five percent of the total project cost, but the exact figure depends on the margin between cost and end value. A scheme with a strong margin is limited by loan to cost, so the deposit is modest and predictable. A scheme with a thin margin hits the loan to GDV ceiling first, and the developer has to put in more equity to bridge the gap, which can push the effective deposit well above a buy-to-let twenty-five percent.

There is also a structural difference in how the equity goes in. A buy-to-let deposit is paid once, at completion. Development finance equity is usually committed up front, weighted towards the land, with the developer's cash going in before the staged drawdowns of the build begin. So even where the percentage looks similar to a buy-to-let, the timing and the calculation behind a development finance deposit are quite different.

How much development finance can I get?

How much development finance you can get is set by the lower of the loan to cost and loan to gross development value ceilings applied to your scheme. Loan to cost is usually capped between sixty-five and seventy-five percent of total project cost, and loan to GDV between sixty and sixty-five percent of the finished value. The lender runs both tests and lends to whichever gives the smaller facility, which is the figure you can actually borrow.

Take a logistics scheme costing five million pounds with a forecast GDV of five million six hundred thousand pounds. At seventy percent loan to cost the facility would be three and a half million pounds. At sixty-two percent loan to GDV it would be three million four hundred and seventy-two thousand pounds. The lender advances the lower of the two, so the borrowing settles at roughly three million four hundred and seventy thousand pounds, and the rest of the cost is your equity. The stronger the margin between cost and end value, the more of the cost the lender will fund.

Adding mezzanine finance behind the senior loan can stretch the total borrowing higher up the cost stack and reduce your day-one equity, at a higher blended rate. Whether that makes sense depends on the scheme: on a strong project it can improve the developer's return, while on a thin one it simply feeds margin to a second lender. We model the borrowing capacity across both ratios, and with and without mezzanine, before approaching the market.

Is it easy to get development finance, and how can you reduce the deposit?

Development finance is achievable but not automatic. A lender funds against a credible scheme, so it wants a realistic budget with genuine contingency, a sound end value supported by evidence of demand, a deliverable exit and a developer or contractor capable of carrying out the work. A first-time developer can secure development finance, particularly on a straightforward logistics unit with a strong location, but should expect closer scrutiny of the exit and the team, and often a slightly lower loan to cost than an experienced developer would achieve.

Where the deposit is the obstacle, there are levers to pull rather than treating the equity requirement as fixed. Additional security, such as another property the developer owns, can reduce the cash needed on the scheme itself. Mezzanine finance can sit behind the senior loan to lift the total borrowing and lower the day-one equity. A short bridging facility can raise the deposit quickly where the developer's cash is tied up in another project that is about to complete.

The supply backdrop helps the case for well-located industrial schemes. UK logistics development completions came in at around sixteen million square feet in 2025, the lowest since 2018 according to Knight Frank, and that constrained pipeline supports rents and end values, which is the loan to GDV side of the equation. We read which lenders are funding logistics development at sensible leverage, model the equity gap honestly, and place the case with the funder most likely to fund it on terms that protect the developer's margin.