Crowdstacker created Property Development Loans in 2021 to respond to demand from investors who were interested in specifically lending funds to businesses which construct and redevelop UK property.

A typical PDL will offer an investor 15% p.a. interest over a loan term of 18 months. The interest offered can be higher or lower depending on the risk, and the term can be longer or shorter depending on the work that needs to be done.

All PDLs are eligible to be held as part of an ISA.

Three different types

There are three versions of a PDL - Develop, Bridge and Exit - all of which provide funding to property developers at different stages of a project. PDLs are generally mezzanine funding, which means the finance supplied is in addition to a loan, or mortgage, from a senior lender. A typical PDL will take the proportion of lending up to between 75% and 85% of the total gross development value (GDV), but it can differ between projects. 

A PDL Develop is used when a developer is actively undertaking work to either construct a new building or redevelop an existing one. A PDL Exit is used when the project is in its final months and whilst there might be some work left to do on site, and the main purpose is to finance the project whilst it is being marketed to potential buyers. A PDL Bridge can be used at any stage of a project to finance it whilst no work is taking place on site, such as when the developer is seeking further planning permission. A PDL Exit is valued against the current sale value of the site, whilst Develop and Exit loans are valued against the final value of the project.

Updates are provided

Developers are asked to provide updates to investors at regular intervals along the course of the project. This helps to show progress, but also provides insights about how the property development process works including the challenges and opportunities which present themselves along the way.