How development in Scotland differs
Planning in Scotland is guided by National Planning Framework 4, published in February 2023, which forms part of the statutory development plan alongside each council's local development plan. Lenders will want to see the planning permission and how any conditions will be met.
Building work in Scotland is controlled through building warrants. If the work needs a building warrant, such as building a new home or demolishing a building, you must get one from the local council before you start, and starting without one is an offence. The council issues a Construction Compliance and Notification Plan with the warrant, setting out when building standards must be notified and inspections carried out. See building warrants on mygov.scot.
The site purchase is taxed under Land and Buildings Transaction Tax, which replaced Stamp Duty Land Tax in Scotland on 1 April 2015, with an Additional Dwelling Supplement that can apply to residential purchases. See Revenue Scotland. The lender's security is a standard security under Scots law, registered in the Land Register of Scotland, and the lender will need Scottish solicitors to act.
Lender coverage in Scotland
Some development lenders on our panel lend across Great Britain or the whole UK, while others lend only in England, or in England and Wales. Coverage within Scotland can also vary, with rural and island sites, and locations with fewer comparable sales, usually attracting fewer lenders than schemes in and around the larger towns and cities.
We check each lender's coverage against your site before approaching it, so you do not lose time on lenders that cannot help. If your scheme is in Scotland and you also need short-term finance for a purchase or refurbishment, see bridging loans in Scotland.
How the facility works
Development lenders typically advance part of the land cost on day one and release the build costs in stages, after a monitoring surveyor confirms the work is done. The loan is limited by a percentage of the gross development value and of total costs, so most schemes need some of your own money in. Interest is usually rolled up and repaid from sales or a refinance, and a development exit loan can repay the development lender if the units take longer to sell.
Land and Buildings Transaction Tax, building warrant fees and Scottish legal costs all need to be in your appraisal. The residual land value calculator and our guide to writing a development appraisal help you test the numbers. We compare lenders on leverage, cost and appetite for your scheme, then approach those that fit with a clear case. Instant Quotes gives indicative figures as a starting point, and final terms depend on each lender's valuation, monitoring surveyor and checks.
