Assetz Capital has bolstered its development finance offering by allowing planning gain and residual undeveloped land value to be used as equity contributions.
This will increase leverage for SME housebuilders while reducing upfront cash requirements.
The lender said developers will now be able to access higher levels of funding from the outset of a scheme, allowing more units to be financed from day one and improving cashflow across projects.
Andrew Fraser, chief commercial officer at Assetz Capital, says: “By recognising planning gain and the value of undeveloped residual land not being constructed as legitimate contributions, we are lowering the upfront cash burden on developers and unlocking additional leverage.
“Developers can now retain more cash for construction, accelerate delivery, and potentially fund multiple schemes concurrently, increasing housing output across the UK.
“Under the updated policy, developers who have invested in securing or enhancing planning approval, as well as those holding additional undeveloped land, can count the resulting value uplift toward their equity contribution.
“All contributions must be fully evidenced, including acquisition costs, planning investment, and site valuation. Purchases at discounted prices do not qualify. All deals are expected to be fully funded, straightforward, and in saleable locations across all regions of the UK.”
The change does not alter Assetz Capital’s existing leverage parameters, with maximum loan to gross development value remaining at 72.5% and loan to cost at 87.5%.
