Part-Sold Schemes: How Unit Release Terms Decide What You Net

You are part-way through a sales run. Some units have exchanged, a few have completed, and the rest sit on the books. The development facility is coming due, and remaining stock will not clear in time.

A bank often wants a single refinance of a finished block, or a clean sale of the last plot. That is not this shape. You need a facility that can live with a shrinking security pool.

The live question on a part-sold scheme is not whether the product exists. It is how the unit-release schedule is written, because that schedule decides what you actually net.

How unit releases are handled on a part-sold scheme

When we underwrite a developer exit bridging loan, we size against the current as-is value of the remaining units, and we write a release mechanism into the facility.

Each unit has a release price: the sum that must reach the lender to discharge that plot from the charge. It is not always the sale price. It is often a floor, set either as a fixed figure per plot or as a percentage of net proceeds subject to a minimum.

If the floor sits above what buyers will pay, you cannot complete. If it sits too low, the residual loan hangs too heavy on the last units. That gap belongs in the term sheet, not in a side letter after drawdown.

A first charge over the unsold plots is registered at HM Land Registry so each transfer can complete only once the lender has executed a deed of release. Your solicitor runs it through the completion statement. Compare that with a single-asset residential bridging loan, where there is one charge and one exit, not a schedule of plot releases.

What happens to LTV as units leave the charge

Every release shrinks the security. We re-test LTV on what is left. Sell the best plots first and the residual loan can look worse, even though cash has come in.

Watch how proceeds are applied. Some facilities pay rolled-up interest and fees first, then principal. You can complete three units and still owe almost the same principal.

Ask for the waterfall in the term sheet. For the arithmetic when the campaign is behind, we have set out how remaining stock is sized on a developer exit.

The last units in a block rarely sell at the same pace as the first tranche. A 12-month tenor does not flex for that on its own. The same discipline of asset, charge and a dated exit is what we applied on bridging finance for a London investment property.

When this bridge is the right tool

A bridging loan of this type fits when remaining units are actually selling, title is clean, and an exit sits inside 3–24 months. That exit is usually further completions, a refinance of the residual block, or a sale of the SPV. We lend against the asset and the exit. Our borrowers are typically property investors, developers and corporates.

It is the wrong tool if absorption has stopped, if plots are defective, or if you need five-year money labelled as a bridge. Cost is higher than a term loan. The main risk is unsold stock meeting a short tenor, with a first charge still sitting on units the market will not take at the release price.

If you want the path from enquiry to funds, the lending process follows the same steps each time: an indicative term sheet usually within 24 hours, then drawdown in typically about two weeks. All of it is indicative and subject to valuation and due diligence.