Development finance due diligence questions.

1. Identify every relevant counterparty

• Which company legally receives the investor's money?
• Is that entity the landowner, developer, issuer or only one part of a wider group?
• Who owns and controls it, and have directors changed recently?
• What experience does the management team have on comparable projects?
• Are contractors, valuers, trustees, sales agents or professional advisers connected parties?

Check Companies House filings, accounts, officers, people with significant control, registered charges and insolvency information. Treat the register as a starting point: filed information can be historic, abbreviated or unaudited.

2. Follow the use of funds

• How much is allocated to land, planning, construction, professional fees and contingency?
• How much pays interest, marketing, commissions, introducer remuneration or existing creditors?
• Can money be used for other projects or general group working capital?
• Is capital released in stages against evidence, or all at once?
• Who monitors expenditure and approves a change to the budget?

A funding schedule should reconcile with the project appraisal and the amount being raised. If the project depends on additional senior debt, equity or future sales, establish whether that funding is committed or merely expected.

3. Understand the project status

• Is the site owned, under option, subject to contract or still being sourced?
• What planning consent exists and which conditions remain outstanding?
• Are title, access, rights, covenants, utilities or environmental matters unresolved?
• Is there a fixed-price building contract, and what protections exist if the contractor fails?
• What contingency is allowed for cost inflation and unforeseen works?

4. Test the valuation and leverage

Identify the valuation basis and date. Current land value, value with planning and projected gross development value are not interchangeable. Ask whether the valuer was independent, which assumptions were made and whether selling costs, tax, finance and remaining construction costs are reflected.

Calculate the debt against both current value and projected completed value. A low-looking percentage based on future GDV can conceal much higher leverage against the asset as it exists today.

5. Verify the security package

• Is there a legal charge, debenture, guarantee, share charge or no specific security?
• Which entity grants each item and what assets does that entity own?
• Has it been executed and registered, rather than merely promised?
• Which lenders, creditors or statutory claims may rank ahead?
• Who holds the security and who can direct enforcement?
• What fees, indemnities or funding does a trustee require before acting?

Read the full first legal charge and security guide before relying on phrases such as “secured” or “property-backed”.

6. Examine the repayment route

Repayment may depend on unit sales, a whole-site sale, refinance, rental income or a future capital raise. Identify the primary route, the evidence supporting it and the alternative if it fails.

7. Read the economic terms in full

• Is interest paid from operating cash, retained from the raise or accrued until maturity?
• Can the issuer extend the term or repay early?
• Which fees are paid to the developer, manager, arranger, introducer and trustee?
• Are incentives or commissions deducted from investor capital?
• Are there related-party payments or conflicts requiring disclosure?

8. Understand regulation and protection

Check who is authorised by the FCA, what regulated activity—if any—is being carried out and whether Financial Ombudsman Service or Financial Services Compensation Scheme protection applies. Do not infer protection merely from the involvement of an authorised firm in one part of the process.

9. Review the documents as a set

Compare the information memorandum, application form, loan note instrument or investment agreement, security documents, valuation, company records and financial model. Material terms should be consistent. Ask for clarification where a marketing summary is broader or more confident than the legal documents.

10. Recognise decision-pressure warning signs

• Urgency that prevents proper review.
• Return claims presented more prominently than loss scenarios.
• Vague answers about the borrower, land title, debt ranking or use of funds.
• Security described without executed documents or registration evidence.
• Reluctance to disclose fees, commissions or related-party arrangements.
• Being coached into an investor category.

Questions do not remove risk

Good due diligence can identify weaknesses, inconsistencies and missing information. It cannot make development finance risk-free or ensure repayment. The purpose is to make the decision informed, not to create certainty that does not exist.