If you’re planning a property development project in Scotland, you need to know the finance options.
While development finance in Scotland is similar to the rest of the UK, there are some differences you should be aware of. From the legal system to government initiatives, Scotland has its own way of doing things.
Let’s get to the bottom of it so you can feel confident on your next Scottish development.
Our Development Finance
We provide competitive and flexible development finance solutions:
- Loan amounts: £250,000 to £250,000,000
- Terms: Up to 36 months (longer periods negotiable for suitable projects)
- Leverage: Up to 70% of Gross Development Value (GDV) or 95% of total costs
- Funding available for individuals, partnerships, limited companies and SPVs
We arrange finance for projects across the UK, including England, Wales, Scotland, and Northern Ireland, as well as in Europe and the US.
Types of Property Development Finance in Scotland
Senior Debt Finance is the most common.
It’s a basic loan, secured against the property or land you’re developing using a first charge. Scottish lenders typically lend 65-75% of the project cost or value, whichever is lower. Interest rates are tied to the Bank of England base rate plus a margin.
Mezzanine Finance is useful if you need more funds. It’s an additional loan that sits ‘on top’ of your senior debt and can lend up to 85% of the project cost. It’s more expensive due to the higher risk to the lender but can get you more funding without using up equity.
Equity Finance involves bringing in investors who will own a share of your project. It’s popular in Scotland for larger developments. You might partner with someone who knows the local market. This spreads the risk but also means sharing the profits.
Unique to Property Development Finance in Scotland
Scotland has its own property laws which affect ownership transfers. You’ll need to budget for Land and Buildings Transaction Tax not Stamp Duty.
The Scottish planning system is different. Local authorities have a lot of control over development. The National Planning Framework 4 sets out Scotland’s long term development plan which could impact your project.
Building regulations in Scotland are different to England and Wales especially around energy efficiency. Make sure your project complies with Scottish Building Standards from the start to avoid costly changes later.
Scotland has government support for property development. The Building Scotland Fund provides loans and equity investments for housing projects. The Scottish National Investment Bank supports projects that align with its missions such as net-zero emissions.
These differences mean that not all lenders will operate in England and Scotland.
Challenges and Opportunities
Scotland has regional variations. A project that’s viable in Edinburgh won’t work in a smaller town. Aberdeen’s property market is driven by the oil industry.
But these challenges bring opportunities. There’s high demand for affordable housing in Scotland especially in the cities. Regeneration projects are common, Glasgow and Dundee are actively encouraging development in certain areas.
How to get Development Finance in Scotland
To increase your chances of getting development finance you should build a strong business case.
Show you know the local market – lenders like thorough research. If you’re new to developing in Scotland consider partnering with an experienced local developer.
Choose your finance option wisely for your project. A simple senior debt might be fine for a straightforward project but more complex projects will need a mix of finance types.
Work with a specialist finance broker who knows the Scottish market.
They can introduce you to lenders that will fund your project type and might have deals that aren’t available direct. Because of the differences in planning and the legal process, some lenders do not offer funding in Scotland. We can identify those that will support your project and negotiate competitive terms on your behalf.
Property development finance in Scotland may seem complicated but it’s about knowing the local market and your options. From the types of finance available to the specifics of the Scottish system there’s a lot to consider. With the right approach and advice you can find the right finance for your project.
Every project is different so get bespoke advice for your situation. Whether you’re an experienced developer or just starting out there’s property development opportunities in Scotland. Go on get started. Your next project is waiting.
