What fees does development finance charge?

Development finance has more fee lines than most commercial loans. Alongside the monthly interest you'll typically meet an arrangement fee (1 to 2% of the loan), sometimes an exit fee (0.5 to 1%), monitoring surveyor fees (around £3,000 to £10,000), a RICS valuation fee (about £2,000 to £5,000), legal fees for both sides (roughly £3,000 to £8,000 combined), and a broker fee (around 1%). Interest, usually rolled up, is the largest cost, and default interest applies if the loan isn't repaid on time.

How much is the arrangement fee on development finance?

The arrangement fee is usually 1 to 2% of the total loan, charged at the start of the facility. On a £1.5m facility, a 1.5% arrangement fee is £22,500. It's a one-off cost, but on a short 12-month term a 2% fee is effectively another 2% a year on top of the interest rate. Many lenders deduct the fee from the first tranche advance rather than requiring it from developer equity, which adds it to the loan and means it accrues interest.

Do I pay the monitoring surveyor and legal fees?

Yes. The developer pays the independent monitoring surveyor who certifies each drawdown (an appointment fee, a charge per site visit and a final certificate, totalling roughly £3,000 to £10,000 on a standard residential scheme), the RICS valuation (about £2,000 to £5,000), and the legal costs of both sides. Standard practice is that the developer pays the lender's legal costs in addition to their own, typically £3,000 to £8,000 combined for a straightforward transaction.

What is default interest on development finance?

Default interest is a higher rate charged if the facility is not repaid by its agreed maturity date, often 2 to 4% per month or materially above the contracted rate, until the loan is cleared. It's one of the strongest reasons to have a credible exit strategy in place before the facility matures. Development exit finance is specifically designed to refinance a maturing development loan and avoid default interest during the sales phase.

Development Finance Fees Explained: Every Cost, in Order

Why Development Finance Has So Many Fees

You’ll find development finance carries more fee lines than almost any other commercial loan, and they compound. The headline monthly rate is only one part of what the facility actually costs you.

You stack six or more fee lines on top of the rate: arrangement, exit, monitoring, valuation, legal and broker, all before a single unit sells. That’s the stack developers underprice, and your appraisal only works if you count every line.

You can’t judge a facility on its headline rate alone. At year-end your accountant lays every fee line beside the interest to see what the scheme truly costs your cash flow.

Lender Fees: Arrangement and Exit

You’ll pay an arrangement fee at the start, usually 1 to 2% of the loan. On a £1.5m facility a 1.5% fee is £22,500, and on a 12-month loan that 2% is effectively another 2% a year on the rate.

At 0.5 to 1% of the loan where it’s charged, the exit fee is the negotiable one: not every lender applies it, and a repeat borrower or a competed deal can often get it trimmed.

You won’t always pay the arrangement fee in cash. It’s often deducted from the first tranche and added to the loan, so it never leaves your cash flow but does accrue interest.

Third-Party Fees: Surveyor, Valuation, Legal

You pay the monitoring surveyor who certifies each drawdown, and it isn’t a lender fee, it’s a cost of the product. Expect an appointment fee, a charge per site visit, and a final certificate, totalling roughly £3,000 to £10,000 on a standard residential scheme.

At £2,000 to £5,000 for a RICS valuation and £3,000 to £8,000 for legals, these are the easy-to-forget lines, and you pay the lender’s legal costs as well as your own.

You can’t avoid paying for both sides’ lawyers here. The day the security gets complex or extra parties join, your solicitor itemises both bills, and they climb before drawdown, not after.

Broker Fees and Interest

You’ll usually arrange the facility through a broker, and a broker fee of around 1% of the loan applies on completion. For most development deals that’s money well spent, because a good broker often recovers it in sharper terms.

Your interest is still the biggest cost by far. Charged monthly, rolled up on drawn balances and repaid at exit, it grows with the rate, your drawdown profile and the length of the build and sell-through.

You can’t shrink interest without shortening the timeline. The drawdown profile is the lever most developers overlook: pace it to what the build needs, and idle cash isn’t quietly charging interest against your cash flow.

Default Interest: The One to Avoid

You’ll meet the harshest cost if the loan isn’t repaid by its maturity date. Lenders typically switch to default interest, often 2 to 4% a month or well above the contracted rate, until the facility clears.

At 2 to 4% a month, default pricing is why a credible, evidenced exit is the single best insurance: clearing or refinancing before maturity keeps you off it entirely.

You can’t afford to drift past maturity on a big facility. Weeks before the date, your finance director arranges an exit bridge, so a slow sales run never tips your cash flow into default rates.

Development Finance Fees FAQs

What fees does development finance charge?
Development finance has more fee lines than most commercial loans. Alongside the monthly interest you’ll typically meet an arrangement fee (1 to 2% of the loan), sometimes an exit fee (0.5 to 1%), monitoring surveyor fees (around £3,000 to £10,000), a RICS valuation fee (about £2,000 to £5,000), legal fees for both sides (roughly £3,000 to £8,000 combined), and a broker fee (around 1%). Interest, usually rolled up, is the largest cost, and default interest applies if the loan isn’t repaid on time.
How much is the arrangement fee on development finance?
The arrangement fee is usually 1 to 2% of the total loan, charged at the start of the facility. On a £1.5m facility, a 1.5% arrangement fee is £22,500. It’s a one-off cost, but on a short 12-month term a 2% fee is effectively another 2% a year on top of the interest rate. Many lenders deduct the fee from the first tranche advance rather than requiring it from developer equity, which adds it to the loan and means it accrues interest.
Do I pay the monitoring surveyor and legal fees?
Yes. The developer pays the independent monitoring surveyor who certifies each drawdown (an appointment fee, a charge per site visit and a final certificate, totalling roughly £3,000 to £10,000 on a standard residential scheme), the RICS valuation (about £2,000 to £5,000), and the legal costs of both sides. Standard practice is that the developer pays the lender’s legal costs in addition to their own, typically £3,000 to £8,000 combined for a straightforward transaction.
What is default interest on development finance?
Default interest is a higher rate charged if the facility is not repaid by its agreed maturity date, often 2 to 4% per month or materially above the contracted rate, until the loan is cleared. It’s one of the strongest reasons to have a credible exit strategy in place before the facility matures. Development exit finance is specifically designed to refinance a maturing development loan and avoid default interest during the sales phase.

How we reviewed development finance fees

What we covered. We explain the fees on development finance in 2026: arrangement, exit, monitoring surveyor, valuation, legal and broker fees, plus rolled-up interest and default interest. We don’t rely on comparison-site summaries or aggregator data.

Data sources. Fee ranges were checked against primary sources in July 2026, including specialist lender product pages, monitoring surveyor and valuer fee scales, and the lenders we assess in our development finance reviews and roundup.

How we handle gaps. Where a fee varies by lender or by scheme, we give the market range rather than a single false-precision number, and we flag that your actual costs depend on scheme size, complexity and the parties involved.

Update cadence. We re-verify this page at least monthly, and whenever market pricing moves. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.

Regulatory note. This page is editorial content, not regulated financial advice. Development finance to a limited company or investor is generally unregulated lending, so compare facilities and read the terms before you sign.