LTGDV — Loan to Gross Development Value — is the single most important metric in development finance. It determines how much a lender will advance, what rate you'll pay, and whether your scheme is fundable at all. Yet it's frequently misunderstood, often confused with LTV, and sometimes miscalculated in a way that undermines loan applications. This guide explains exactly what LTGDV means, how it's calculated, and why it matters so much to lenders.
LTGDV stands for Loan to Gross Development Value. It expresses the total development finance facility as a percentage of the completed, developed value of the project — the GDV (Gross Development Value).
LTGDV = Total Facility (land + build) / Gross Development Value x 100
The GDV is the projected value of the completed development — the price at which all units could be sold, or the investment value based on completed rental income. It is assessed by an independent RICS valuer and is the denominator against which all development finance underwriting is measured.
LTV (Loan to Value) is the loan as a percentage of the current value of the security property. LTGDV is the loan as a percentage of the future completed value. They answer different questions:
| Metric | Numerator | Denominator | Used For |
|---|---|---|---|
| LTV | Current loan balance | Current property value | Bridging loans, mortgages |
| LTGDV | Total development facility | Projected completed value (GDV) | Development finance |
A development site might have a current value (as land) of £500,000 but a GDV of £2,000,000. A loan of £1,000,000 represents 200% LTV on current value — but only 50% LTGDV on the completed development value. LTGDV is the only meaningful metric for development lending.
The industry standard maximum LTGDV is 65%–75%, with most mainstream development lenders sitting at 65%–70%. MW Capital Advisory applies a hard maximum of 75% LTGDV as a viability threshold — above this, developer equity is too thin to absorb cost overruns or value shortfalls.
| LTGDV | Lender Appetite | Rate Impact |
|---|---|---|
| Below 55% | Excellent — widest choice | Lowest available rates |
| 55%–65% | Good — most mainstream lenders | Standard market rates |
| 65%–70% | Standard — most specialist lenders | Slight premium |
| 70%–75% | Acceptable — specialist lenders | Higher rate |
| Above 75% | Mezzanine finance required | Specialist pricing |
| Item | Amount |
|---|---|
| Land purchase price | £400,000 |
| Build cost (contractor + fees) | £800,000 |
| Total project cost | £1,200,000 |
| Developer equity contribution (20%) | £240,000 |
| Total development finance facility | £960,000 |
| Gross Development Value (GDV) | £1,600,000 |
| LTGDV | 60% (£960k / £1,600k) |
| Profit on GDV | 25% (£400k / £1,600k) — comfortably above 20% minimum |
💡 The 75% LTGDV rule: MW Capital Advisory will not progress schemes above 75% LTGDV. Above this level, developer equity is insufficient to absorb cost overruns or value shortfalls. If your LTGDV is above 75%, mezzanine finance or additional equity is required before mainstream lenders will engage.
GDV is not the developer's estimate — it's an independent RICS valuation. The valuer assesses comparable sold prices for similar completed properties in the same area, adjusting for specification, location, and current market conditions. For residential schemes this means comparable sold house prices. For commercial schemes it means investment yield analysis on comparable let properties.
GDV is the most scrutinised figure in development finance. Optimistic GDV assumptions are the most common reason development finance applications are down-valued. Use conservative comparables, and expect the RICS valuer to apply caution to schemes that are large relative to local market absorption capacity.
Lenders assess LTGDV alongside profit on GDV. The standard minimum is 20% profit on GDV:
Profit on GDV = (GDV - Total Cost including finance) / GDV x 100
A scheme with 65% LTGDV but only 12% profit on GDV would still be declined by most lenders — the margin is insufficient. A scheme with 70% LTGDV and 22% profit on GDV is a more fundable proposition. Both metrics must be satisfied.
Alongside LTGDV, lenders also consider LTC (Loan to Cost) — the total facility as a percentage of total project cost (land + build + fees). Most lenders cap LTC at 80%–85%, meaning you must contribute at least 15%–20% of total costs as equity. LTC and LTGDV work together: a scheme can pass LTGDV but fail LTC if the GDV is very high relative to costs, or vice versa.
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