Guide · 8 min read
What GDV means, how valuers assess it, the difference between GDV and net development value, and how loan-to-GDV caps size every development facility.
Written by Matt Lenzie · Published 10 June 2026
Advice from
Matt Lenzie · 25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
Every number in a development deal hangs off one figure. The facility is capped at 60% to 65% of it. The land is worth whatever is left after subtracting costs and profit from it. The developer's margin is the slice of it that survives the build. That figure is gross development value, GDV, and the uncomfortable truth, as of June 2026, is that the version that matters is not the one in your appraisal or your agent's brochure: it is the one the lender's valuer signs, on today's comparable evidence, before you have drawn a pound.
This guide explains what GDV actually is, how a valuer constructs it, the GDV-versus-NDV distinction that quietly moves five-figure sums, why loan to GDV is the lender's primary risk metric, and how to sanity-check an agent's GDV before you commit to a site. It pairs with our guide to how development finance works end to end, and the terms behind it sit on our development finance page.
Gross development value is the aggregate open-market value of the completed scheme, assessed as at the valuation date. Six houses that would each sell for £400,000 if they stood finished today give a GDV of £2,400,000. The definition's whole force is in the tense: it is today's value of tomorrow's building. A valuer working to RICS Red Book standards values on current evidence and current demand, and will not capitalise the developer's view that the local market will rise 8% before practical completion. If growth happens, it lands in the developer's profit; lenders will not advance against it, because hoped-for inflation is not security. The flip side is equally mechanical: if the market falls during the build, the GDV in the loan agreement does not protect anyone, which is why the gearing maths below matters so much.
For a residential scheme the valuer constructs GDV plot by plot using comparable evidence, in practice three layers of it. First, sold prices of genuinely similar units near the site, with HM Land Registry price paid data as the backbone, adjusted to a per-square-foot basis and weighted toward the most recent transactions. Second, evidence from competing new-build schemes, including incentives actually given (deposit contributions and upgrades depress true achieved prices below headline Land Registry entries). Third, current listings, used only as a ceiling: asking prices are sentiment, sold prices are evidence.
Two debates recur in almost every development valuation. The first is the new-build premium. New units do sell above second-hand stock, but valuers apply the premium cautiously, typically 5% to 10% where the local evidence supports it at all, because the premium evaporates at resale and lenders know it. An appraisal that needs a 15% premium over the best second-hand comparables to make its profit-on-cost test is an appraisal a valuer will cut. The second is the bulk, or investment, discount. Where the realistic exit for six flats is a single investor buying the block rather than six separate owner-occupier sales, the valuer reports an investment value, commonly 10% to 20% below the sum of the individual values, reflecting the single buyer's pricing power and the income-based approach they will take. Some lenders underwrite small schemes on the aggregate unit values; cautious ones, especially on flatted blocks in slower markets, size the facility on the bulk figure. Which assumption your lender uses can move the facility by more than the arrangement fee, and it is worth asking the question explicitly at term-sheet stage.
Net development value (NDV) is GDV minus the cost of turning buildings into cash: agency fees at roughly 1% to 1.5%, sales legals at £1,000 or so per unit, and on some definitions an allowance for finance during the sales period, the window a development exit facility exists to fund cheaply. NDV typically settles 2% to 4% below GDV. The reason the acronym matters is that lender term sheets are split on which one the facility cap references. On the worked scheme below, 65% of a £2,400,000 GDV is £1,560,000; apply a 3% sales-cost deduction first and 65% of the £2,328,000 NDV is £1,513,200. Same lender appetite, same percentage, £46,800 less facility, which comes straight out of the developer's working capital. When comparing two term sheets, an honest comparison converts both to the same base before looking at the headline percentage.
Loan to GDV (LTGDV) is the peak facility as a percentage of the completed value, and it is the number a development credit committee anchors on, ahead of loan to cost, because it measures the lender's position in the only scenario that matters to them: the scheme is finished and has to be sold into whatever market exists. As of June 2026, senior money caps at 60% to 65% LTGDV, stretch senior at 70% to 75%, and mezzanine layers can take combined debt to about 75% to 80%.
The sensitivity table shows why the cap sits where it does, using the same six-house scheme as our development finance guide: GDV £2,400,000, total cost £1,975,000, facility £1,560,000 at 65% LTGDV, developer profit £425,000.
| Scenario | GDV | LTGDV on £1.56m facility | Developer profit | Change in profit |
|---|---|---|---|---|
| Appraisal | £2,400,000 | 65% | £425,000 | baseline |
| GDV down 5% | £2,280,000 | 68% | £305,000 | −28% |
| GDV down 10% | £2,160,000 | 72% | £185,000 | −56% |
| GDV down 17.7% | £1,975,000 | 79% | £0 | −100% |
| GDV down 35% | £1,560,000 | 100% | −£415,000 | Lender exposed |
Read the asymmetry. A 10% fall in GDV costs the lender nothing, their cover moves from 65% to a still-comfortable 72%, but it costs the developer 56% of the profit. The developer's entire margin is gone at a 17.7% fall, while the lender is not touched until values drop 35%. That is the gearing bargain in one table: the developer takes the first loss in exchange for keeping everything above the line, and the lender's cap is set precisely so that the developer's profit and equity burn through long before the debt does. It also explains lender behaviour that frustrates borrowers: a valuer trimming GDV by 8% barely changes the lender's risk, but it can halve the developer's case for doing the scheme at all, which is why fighting for a defensible GDV at valuation stage is worth more than fighting for an eighth of a percent on rate.
GDV also prices the land, through the residual method every developer and every valuer uses. Start with GDV, deduct build costs, professional fees, finance and the developer's required profit, and the residue is the most the land is worth to that scheme:
| Residual computation | Amount |
|---|---|
| GDV | £2,400,000 |
| Less: required profit at 20% on cost | −£400,000 |
| Less: build cost including contingency | −£1,080,000 |
| Less: professional fees, CIL/s106, warranties | −£110,000 |
| Less: finance costs | −£185,000 |
| Residual land value | £625,000 |
The developer in our worked example bought at £600,000, slightly inside the residual, which is what "bought well" means in this trade. Overpaying for land is the most common scheme killer we see, and the mechanism is unforgiving: every pound paid above the residual comes directly out of the profit line, the profit line is what the lender's 17.5% to 20% profit-on-cost test measures, and a scheme that appraises at 12% profit on cost because the land cost £700,000 does not get a worse rate, it does not get funded. Competitive land markets transfer the development profit to the landowner; the discipline is to let the residual set your maximum bid and walk away above it.
Land agents sell sites, and the GDV in a sales pack is a marketing number until proven otherwise. The check is an afternoon's work and it is the cheapest insurance in development. First, rebuild the number plot by plot: a schedule of each unit with its square footage and an evidenced price per square foot, not a single rounded total. Second, use sold prices only, Land Registry completions within the last 6 to 12 months for comparable size and specification, and treat asking prices on the portals as an upper bound, never as evidence. Third, apply the new-build premium only where local sold evidence of new stock actually shows one. Fourth, if the realistic exit is a block sale to an investor, price the bulk discount in now rather than discovering it in the valuation report. Fifth, run the result through the residual: if the site only works at the agent's GDV and not at yours, the price is wrong, not your spreadsheet. A formal pre-purchase opinion from the same valuation firms the lenders instruct costs £1,500 to £3,000 and routinely pays for itself; for schemes heading to ground-up development finance, it also flushes out the valuation surprises before they can derail an agreed facility.
Gross development value is the aggregate open-market value of a development scheme as if it were complete today, assessed at today's prices and today's demand, not at the prices the developer hopes will exist when the units finish in 18 months. A scheme of six houses each worth £400,000 on current comparable evidence has a GDV of £2,400,000. It is the single number from which the development facility, the land value and the profit are all derived.
Net development value (NDV) is GDV minus the costs of selling the units, agency fees of roughly 1% to 1.5%, legal fees, and sometimes an allowance for sales-period finance. NDV typically lands 2% to 4% below GDV. The distinction matters because some lenders cap their facility against NDV rather than GDV: on a £2.4m scheme, 65% of GDV is £1,560,000 while 65% of a 3%-discounted NDV is about £1,513,000, a £47,000 difference in day-one borrowing capacity from one word in the term sheet.
Loan to GDV is the development facility expressed as a percentage of the completed scheme's value, and it is the development lender's primary risk metric. As of June 2026 senior lenders cap LTGDV at 60% to 65%, stretch senior at 70% to 75%, and mezzanine structures can take combined debt to around 75% to 80% of GDV. At 65% LTGDV the completed scheme's value must fall 35% before the senior lender's debt is exposed, which is the cushion the cap is designed to create.
The valuer builds GDV plot by plot from comparable evidence: recent sold prices, not asking prices, of similar new and modern units near the site, adjusted for size on a per-square-foot basis, then sense-checked against the local new-build premium. Where a lender expects multiple units to be sold to a single investor rather than unit by unit, the valuer also reports a bulk or investment value, commonly 10% to 20% below the aggregated individual values, and a cautious lender may lend against that lower figure.
Residual land value works backwards from GDV: take the completed value, deduct build costs, professional fees, finance costs and the developer's required profit (normally 17.5% to 20% on cost), and what remains is the most the land is worth to that scheme. On a £2.4m GDV with £1.19m of build and fees, £185,000 of finance and a 20%-on-cost profit requirement, the residual lands at roughly £625,000. Paying meaningfully above the residual is the most common way development schemes are killed before a brick is laid.
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