The short version
- Development loans are usually repaid as each plot completes, so every late completion keeps interest running. Typical rates in 2026 are around 0.55% to 0.85% a month.
- If completions run past the loan's term, the cost jumps: extension fees, a higher margin, or default interest.
- A finished home that hasn't completed can also cost council tax, and every extra month gives a buyer more time to drop out.
The interest clock
Most development loans are repaid from sales. As each plot completes, the money goes to the lender, and until then interest runs on what's still owed. In 2026, typical rates are around 0.55% to 0.85% a month, with arrangement fees of 1% to 2% and exit fees on some loans. Some smaller-builder products cost more: one lender's rate for professional development was 1.09% a month in January 2026.
The interest on £5m of development debt at 0.75% a month, a typical 2026 rate. Each month that money isn't repaid, it costs the same again.
Small slips add up. Funding Agent works through an example: on £500,000 of peak debt at 0.75% a month, a build and sale that slips from 10 months to 14 adds about £15,000 of interest.
When the loan runs past its term
Development loans have a fixed term, such as 12 months. If the last plots haven't completed by then, the developer usually needs an extension, exit finance, or faces default pricing under the loan agreement. None of them is cheap.
- An extension. In one 2026 case, the lender offered a 1.5% fee on £2.1m outstanding, plus an extra 0.3% to 0.4% a month. The extra cost came to over £70,000 while the last homes sold.
- Default interest. Default rates are set well above the normal rate. In 2026 the Court of Appeal upheld a default rate of 4% a month on a secured property loan.
- Track every plot's expected completion against the loan's term, not just the build programme.
- If completions start slipping, talk to your lender early, while you still have choices.
Council tax on a finished, empty home
Once a new home is finished, or could be within three months, the council can serve a completion notice, and the developer is liable for council tax until it's sold. The national six-month exemption for empty homes ended in 2013. Today 45% of councils give no discount at all for empty new homes, and the most common discount is 100% for just one month.
In the Home Builders Federation's 2026 survey, 88% of small and medium builders said council tax affects their cash flow, with charges of £220 to £320 per home per month in one case. Homes left empty and unfurnished for a year can also attract the empty homes premium, although since April 2025 homes being actively marketed for sale are exempt from it for up to 12 months.
Longer waits, more drop-outs
The longer a sale takes, the more can go wrong. Across the UK, 23.7% of agreed sales fell through in the first quarter of 2026, and the government puts it at one in three. On new build, a late handover can push the buyer's mortgage offer past its expiry: in a 2025 Santander focus group of 150 brokers, a third had seen offers expire because of build delays. And if the contract's long stop date passes, the buyer may be able to cancel and get their deposit back.
Before we built PlotBot, one of our sales dragged on because nobody could get the survey booked. The agent kept trying to reach the developer to book the visit, they kept missing each other on the phone, and the agent's emailed request had landed in the developer's junk folder. It took over a month just to book the survey. Every week lost before exchange is a week later to completion, with the development loan's interest still running and the completion money arriving later.
With PlotBot, a survey request sits in the developer's portal as something waiting on them, and PlotBot reminds them if it hasn't been answered after one working day.
Where the delays come from
Once the home is finished, most late completions come down to a handful of things:
- the buyer isn't ready when notice lands: no valid mortgage offer, or the money isn't lined up;
- the lender is still waiting for paperwork, such as the warranty cover note or the building control certificate;
- enquiries between the solicitors are still open;
- nobody spotted the problem until the completion date was already close.
Our guides on serving notice to complete and mortgage offers that run out go through each one.
A checklist for on-time completions
- Every plot's expected completion tracked against the loan's term
- Each buyer's mortgage offer expiry checked against the handover date
- Warranty and building control paperwork ready before notice
- Buyer readiness checked before notice is served
- Completion dates counted in working days, and everyone told the same day
- Council tax on finished homes expected and budgeted
- Your lender told early if completions are slipping
See which completions are slipping, and why.
PlotBot forecasts exchanges, completions and completion money site by site, month by month, so you can plan lender repayments. Every sale has a red, amber or green status and a plain answer to "who are we waiting on?", and PlotBot tracks each buyer's mortgage offer against your handover dates. It never contacts your buyers: sales are progressed through the agent, the buyer's solicitor and their broker.
Questions developers ask
How much does a month's delay cost on a development loan?
It depends on the loan. At typical 2026 rates of 0.55% to 0.85% a month, every £1m still owed costs about £5,500 to £8,500 in interest each month, before any extension fees or default interest.
Do developers pay council tax on finished new homes that haven't sold?
Usually, yes. Once the council serves a completion notice, the developer is liable until the home is sold. Some councils give a short discount, often one month, and 45% give none.
What happens if a development loan runs past its term?
That's set by the loan agreement. It usually means an extension with a fee and a higher margin, exit finance, or default interest. Talk to your lender early.
Sources
- Development finance rates: Funding Agent (August 2026); the slippage example: Funding Agent (August 2026); Mortgage Professional, Funding 365 rates (September 2026); Mortgage Solutions, Masthaven rates (January 2026)
- Repayment from sales: Business Expert, Exit finance (July 2026)
- Extension costs: FD Commercial case study (October 2026)
- Default interest: Charles Russell Speechlys on Houssein v London Credit (July 2026)
- Council tax on new homes: Home Builders Federation, Licence to bill (2026); Dorset Council, New build properties; GOV.UK, Council tax premiums guidance (May 2026)
- Fall-throughs: Property Industry Eye, TwentyCi data (April 2026); GOV.UK (June 2026)
- Offers expiring during build delays: Santander (May 2025); long stop dates: HomeOwners Alliance
This guide is general information, not financial or legal advice. Your loan agreement and your council's rules decide what applies to you.
Also read: Notice to complete on a new build: what developers need to get right