Choosing the Right Finance Structure for Your UK Property Project

Selecting the right finance structure can have a decisive impact on the success of a property project. Beyond headline interest rates, financing decisions influence cash flow, risk exposure, execution timelines, and overall project viability.

In the UK property market, where projects often face planning delays, construction risk, and shifting market conditions, choosing the right structure is as important as choosing the right asset.

This article outlines a practical framework for selecting an appropriate finance structure for a UK property project.

Start With the Project, Not the Product

A common mistake in property finance is starting with a funding product rather than the project itself.

Before engaging lenders, developers and investors should clearly define:

• The asset type and condition
• The stage of the project lifecycle
• Development or refurbishment timelines
• Exit strategy and assumptions

Financing should be designed around these factors — not the other way around.

Match Finance to the Project Lifecycle

Different stages of a property project require different capital structures.

Acquisition Phase
Speed and certainty often matter most. Bridging or structured acquisition finance may be appropriate, particularly where assets are non-income-producing or require repositioning.

Development Phase
Development finance is typically structured with staged drawdowns linked to construction milestones. Flexibility around timelines is critical.

Stabilisation Phase
As assets become income-generating, refinancing into longer-term senior debt may reduce the cost of capital.

Exit or Refinance
Capital structures should allow sufficient flexibility to accommodate market conditions at exit, including refinancing risk.

Understand Risk Allocation

Every finance structure allocates risk between borrower and lender.

Key considerations include:

• Loan-to-value and leverage levels
• Interest cover and covenant requirements
• Security packages
• Repayment profiles

Structured and alternative lenders tend to focus on downside protection rather than rigid metrics, which can be advantageous for complex projects — but requires careful alignment.

ROSCAP’s approach to structuring property finance emphasises clarity around risk allocation from the outset, helping borrowers avoid future constraints.

Cost vs Certainty: A Critical Trade-Off

Lower-cost finance is not always better finance.

In time-sensitive transactions, certainty of execution can be more valuable than marginal pricing differences. Delays caused by financing uncertainty can increase holding costs, jeopardise acquisitions, or disrupt development schedules.

Assessing total project economics, rather than isolated financing costs, leads to better decisions.

The Importance of the Right Capital Partner

Not all lenders are suited to all projects. Beyond capital availability, borrowers should evaluate:

• Experience with similar assets
• Ability to structure bespoke solutions
• Speed and reliability of execution
• Governance and transparency

Specialist capital partners with deep market knowledge can add value well beyond funding alone.

Final Thoughts

Choosing the right finance structure is a strategic decision, not an administrative one. The most successful UK property projects are those where financing supports the asset strategy — rather than constraining it.

By aligning capital with project realities, developers and investors can manage risk more effectively and improve execution outcomes.

‍