Bridging Finance – Development Exits
A Case Study
Novellus operates in the UK and Ireland, offering alternative funding solutions to that of the mainstream banks, secured primarily by real estate. Bridging finance has become an essential tool for property investors, developers and entrepreneurs who need quick access to capital.
Navigating Market Challenges: The need for Development Exit Finance
According to a Rightmove report in October 2025, the average asking house price is £371,422, reflecting a 0.3% monthly increase but a 0.1% annual decline. Further, buyer demand is down 5% compared to September 2024.
This cautious buyer behaviour is influenced by several factors. An article by Connaughts Law states that government legislation, such as the reversion of the Stamp Duty Land Tax (SDLT) nil-rate band from £250,000 to £125,000 in April 2025, has increased transaction costs, particularly for first-time buyers and investors. Additionally, a report by Joseph Rowntree Foundation outlines that the introduction of the Higher Rate Additional Dwelling (HRAD) at 5% has further elevated costs for those purchasing additional properties.
On the supply side, rising construction costs have impacted developers’ profitability. According to BCIS, building costs are projected to increase by 15% over the next five years, driven by higher prices for materials and labour shortages. These increased expenses can affect property valuations, making it more challenging to achieve desired sale prices.
In this environment, developers may find it difficult to sell completed projects promptly, potentially leading to financial strain as imminent repayment obligations of development loans can force fire sales that would erode any profitability in the project.
Development exit bridging finance provides the breathing space developers require to market properties for a sufficient time and maximise returns. At Novellus, our development exit product is designed specifically to bridge the gap between completion and sale – providing time and flexibility when it’s needed most.
Novellus Case Study
The borrower, an experienced developer specialising in luxury property, had recently completed the extensive refurbishment of a unique seven-storey, Grade II listed period property in London. The 8,500 sq ft home had been transformed to an exceptional standard, combining contemporary design with the heritage of its original features.
With the development successfully completed, the borrower required a refinance bridge to repay the existing development facility and secure sufficient time to market the property so that full value could be achieved through an orderly sales process.
Novellus provided a £4.7 million refinance bridge, representing 70% loan-to-value (LTV), on a 12-month term at a monthly rate of 0.80%. From initial enquiry to completion, the transaction was executed within just 15 days – demonstrating our responsiveness and commitment to delivering with speed.
Fast, Flexible Funding
At Novellus, we understand that developers need speed and certainty once projects have reached completion. Many lenders can take weeks to respond which ultimately creates the risk of a borrower going into breach on their existing facility. Novellus eliminates this obstacle. We maintain full control over our lending decisions, ensuring that time-sensitive refinances can be met.
Understanding the Borrower and the Business Plan
Our approach went beyond the numbers. The borrower’s strong track record, combined with the property’s prime location and exceptional finish, gave us confidence in the underlying asset and the borrower’s strategy. We recognised that additional time to market the property would not only reduce the pressure the borrower was facing but would likely enhance the ultimate sales outcome.
The Outcome
By refinancing the existing development facility, Novellus provided the borrower with the flexibility and breathing room required to a complete sale at the price that allowed for a profitable exit once finance costs had been factored in.
Why Novellus
This case study demonstrates the value of development exit finance and what sets Novellus apart. We are 100% privately funded, decisive, and aligned with our clients’ goals. Whether it’s refinancing an existing facility, unlocking equity for future projects, or bridging the gap between completion and sale, we act quickly and with confidence.
When timing matters and certainty is essential, Novellus is more than just a lender – we are your finance partner of choice.
References:
https://connaughtlaw.com/uk-property-law-changes-2025/?utm_source=chatgpt.com
