In the complex world of UK property development, success depends not only on location and planning but also on how your project is funded. At the core of any development financing structure is the capital stack—a layered representation of who has invested what, and in what order funds are returned. Senior debt sits at the foundation of this stack, providing vital leverage for land acquisition, construction, and development.
Fraser Bond supports London-focused developers and investors in structuring capital stacks that maximise return on equity while maintaining legal and financial compliance throughout the project lifecycle.
The capital stack refers to the hierarchy of capital sources used to finance a property development. Each layer reflects different risk levels, returns, and repayment priorities. The typical capital stack includes:
The largest and most secure portion, senior debt is usually provided by banks or specialist lenders. It holds first charge on the asset and is repaid before all other capital.
Loan-to-cost (LTC): Up to 65–80%
Cost: 6%–9% interest per annum
Security: First legal charge over the property
Fraser Bond works with major UK senior debt providers to secure tailored lending packages for developments across London, from new-build flats to mixed-use schemes.
Positioned above senior debt, mezzanine finance fills the gap between senior loans and equity. It carries higher risk and cost and is typically secured via second charge.
LTC: Up to 85–90% when combined with senior
Cost: 10–16% interest plus exit fees
Use: Accelerates project delivery with less equity needed
Less common, this layer involves investors who earn a fixed return but do not have legal charge over the asset. Useful for developers preserving control while enhancing leverage.
This is the most junior (and riskiest) layer, typically contributed by the developer or investor themselves. It absorbs any loss before others and commands the highest return expectations.
In prime and emerging London postcodes, senior debt allows developers to acquire high-value land and fund construction efficiently. Key reasons to prioritise strategic senior debt include:
Capital Efficiency – Borrowing 65–75% of project costs enables developers to take on multiple sites using less upfront equity
Project Viability – Allows funding of build costs, professional fees, and Section 106 obligations
Lower Cost of Capital – As the least risky tier, senior debt comes with the lowest borrowing cost
Lender Confidence – Reputable senior debt providers require planning permission, QS reporting, and exit viability—ensuring your scheme is fully underwritten
Fraser Bond liaises directly with high-street and private lenders, ensuring your senior facility is correctly structured and drawdowns align with construction milestones.
Fraser Bond offers a full-service advisory to developers and investors seeking to structure capital stacks for projects ranging from £1m to £150m+. Our London-based property finance specialists help you:
Source senior, mezzanine, and equity finance for residential, PRS, and commercial schemes
Model capital structures based on loan-to-GDV, cost, and equity contribution
Coordinate lender requirements including valuations, project monitoring, and planning consents
Manage compliance with lender covenants, exit timelines, and repayment strategy
Whether you're refinancing land in Battersea or launching a ground-up development in Shoreditch, we deliver funding strategies aligned with your objectives.
Understanding the capital stack—and especially the role of senior debt—is critical for funding successful developments in London’s competitive real estate market. Fraser Bond provides the structure, strategy, and lender access needed to deliver secure, profitable outcomes.
Visit FraserBond.com to speak with a development finance specialist or request a capital stack review tailored to your next project.
