How development finance lenders are responding to planning delays and build cost pressure
By Jake Mccausland, Head of Development Finance at London Credit
Across the UK, planning delays have become a defining challenge for developers and their finance partners.
Official data from early 2025 shows that only 19% of major planning applications were decided within the statutory 13-week period. It’s a stat that highlights how often agreed timelines are overtaken by reality. In many cases, planners and applicants agree to extend decision deadlines, but even then deals are being held up for months longer than expected. According to industry research, the average time to determine a major residential outline application has reached around 783 days — roughly two years. That is a long period to have capital tied up and uncertainty hanging over delivery timelines.
At the same time, the costs of building are rising. Tender prices for construction work rose by around 2.5 per cent in the year to late 2025, and materials costs climbed by about 3.3 per cent over the same period. These pressures squeeze margins, complicate cashflow forecasts and increase the cost of delivering viability-tested schemes. For developers who have already paid upfront for land and planning advice, this combination of delay and cost escalation can quickly make previously viable projects hard to fund.
For development finance lenders, this backdrop has changed how deals are assessed and priced. Underwriting now has to take account not just of land value and projected end value, but of the very real risks that arise from slower planning decisions and elevated cost inputs. Traditional underwriting models, based on quick decision cycles and stable cost forecasts, are no longer sufficient. Lenders are adapting by placing greater weight on certain aspects of a proposal, including detailed cashflow analysis that accounts for extended timelines, realistic cost allowances that reflect current market conditions, and a focus on exit certainty rather than headline returns.
In practice, this shift means that lenders are looking for a more complete picture at the outset. Case submissions that simply replicate an appraisal without addressing planning risk and cost sensitivity are more likely to be pushed back. Instead, development proposals now benefit from having clearly articulated timeframes that take into account the probability of delay, backed by contingency plans that show how cost increases will be managed. This deeper level of analysis reduces the likelihood of surprises emerging during detailed underwriting, and it helps lenders to make credit decisions with greater confidence even when market conditions are unsettled.
From the broker perspective, understanding these considerations is critical. Brokers are often the first to gather all the information required by a lender, so how they package and present a case can materially affect the outcome. When brokers engage early with a lender on planning risk, on how cost forecasts have been built, and on the assumptions underpinning valuations, it creates a more transparent dialogue. That, in turn, can lead to quicker decisions and a smoother path to funding. Lenders appreciate when brokers are realistic about potential bumps in the process, rather than presenting an overly optimistic timetable that does not reflect the pace at which planning permissions are actually being processed.
At London Credit, our development finance proposition reflects this more nuanced underwriting approach. Our offering can fund a wide range of schemes, from permitted development and extensions through to ground-up construction and it’s supported by a framework that acknowledges developers and brokers need certainty on how far senior capital will go and clarity on how risk is being apportioned. A thoughtful underwriting stance, combined with an openness to different deal structures, can make all the difference in securing support for a scheme that might otherwise struggle to attract backing.
Even for experienced developers, the current environment demands a disciplined eye on both the planning process and the cost base of a project. As delays become more the norm than the exception, projecting a timeline that accounts for real world conditions is essential. Similarly, understanding that build cost forecasts need to reflect recent trends in tender prices and materials helps avoid overly optimistic valuations that ultimately delay credit decisions.
This shift isn’t simply about caution on the part of a lender. It’s about acknowledging how the development landscape has changed and adapting underwriting to match the environment. Developers who recognise these pressures early, and who work with brokers to present a robust case, are much more likely to secure timely funding. For brokers, the role they play – in shaping expectations and clarifying risk at the outset – has become even more important.
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