Net development value vs GDV: the difference and why lenders use NDV

GDV and NDV set side by side

Gross development value is the open market value of a finished scheme before any cost of sale is deducted, and net development value is that same finished value after the costs of sale are taken off. Set side by side, they measure one asset at two points: GDV at the headline and NDV at the net sales proceeds. The change from gross to net is the change from a turnover figure to a take-home figure. A developer who quotes GDV is quoting the sale price; one who quotes NDV is quoting what lands in the account.

In a development appraisal the two figures sit one line apart. A RICS Registered Valuer sets the gross development value first from comparable evidence, and the appraisal then takes off the costs of sale to arrive at net development value, before working down through build cost and required profit to the residual land value. Because NDV is always GDV minus something, it is always the lower of the pair, and the size of that something is the whole story of this page. The step-by-step formula sits on our companion guide at /learn/net-development-value-explained/, so here we hold the two values against each other.

What comes off GDV to arrive at NDV

The costs of sale are the deductions that turn a gross development value into a net development value, and on most residential schemes they group into four recurring lines plus one that recent law has all but removed. Each is a cost the developer incurs specifically to convert finished units into cash, which is why they sit between the sale price and the proceeds rather than inside the build cost. The table below runs them across a five million pound GDV scheme. Every number is illustrative and not an offer of finance.

In this illustration the costs of sale total 210,000 pounds, so the net development value is 4,790,000 pounds against a gross development value of five million. The ground rent line is worth a pause. On new residential long leases the Leasehold Reform (Ground Rent) Act 2022 restricts ground rents to a peppercorn, so the freehold reversion that older appraisals once capitalised into the gross figure now contributes effectively nothing. Any scheme still carrying a ground rent capitalisation line is overstating both its GDV and its NDV, and a valuer will strip it out. How these costs are treated for tax is a question for a qualified accountant.

Why exit funders size multi-unit stock on NDV

An exit funder leans on net development value because a development exit loan is repaid from net sales proceeds, not from the headline value on the valuation front page. On a block of flats or a terrace of houses held as unsold stock, the funder is not asking what the units fetch in an estate agent's window; it is asking what the block realises if it has to be sold in the timescale the loan allows. That question pulls the sizing toward NDV, and on multi-unit stock it pulls harder, because a lender pricing a fast disposal assumes the block clears to a single buyer rather than twelve separate owner-occupiers.

A single-line sale to an investor almost always attracts a discount to the aggregate unit value, often called a bulk or investor discount, and the valuer captures it inside a net realisable or ninety-day figure that behaves like an NDV. That is why a funder can look at a five million pound GDV and still work its cushion from a lower net number. Named lenders such as LendInvest, Shawbrook, Octane Capital and United Trust Bank publicly operate in this market, criteria change constantly and nothing here is an offer, but the common thread is that the exit is stress-tested against the net figure the block would fetch under pressure. We place each case with the funder whose view of that figure best fits the scheme.

How the GDV to NDV gap shifts by scheme type

The gap between gross development value and net development value is not a fixed percentage; it moves with how the finished scheme is sold and valued. On houses sold one by one to the open market, the gap is close to the ordinary costs of sale and little more, because each buyer pays a retail price. On a single block of flats sold to an investor, a bulk discount stacks on top of the costs of sale and the gap widens. On a build-to-rent block the figure is reached a different way again, by capitalising the net rent at a yield and deducting a purchaser's costs, so the gap is driven by transaction costs rather than sales incentives.

Reading the gap correctly changes the plan. A developer of open-market houses can hold NDV close to GDV through an orderly retail process, so a sales-period bridge on the pillar product at /solutions/development-exit-loans/ can lean on a high proportion of the gross value. A developer of a build-to-rent block should model the investment valuation from the start, because once the scheme is priced on a yield the relevant figure is the capitalised net income after purchaser's costs, not the notional sum of individual flat prices. Knowing which curve your scheme sits on before the valuer arrives is what stops a surprise at the leverage stage.

What NDV does to your leverage headroom

Leverage headroom is the room between the loan you want and the value the funder will lend against, and net development value is the figure that quietly sets that ceiling on multi-unit stock. A development exit is sized through loan to GDV, indicatively as high as 70 to 75 percent, and on a clean retail scheme that cap works off a gross value close to the net. The moment a valuer reports a lower net or bulk figure, the effective cap moves onto that number, and the day-one advance falls even though the headline GDV has not changed. The worked steps below show the mechanism; the figures are illustrative and not an offer of finance.

1. Take a five million pound gross development value and a target 75 percent loan to GDV, which points to a 3.75 million pound advance.
2. The valuer reports a single-line net figure of 4.5 million pounds, reflecting a bulk discount to the aggregate unit value.
3. The funder measures its cap against that net figure, so 75 percent of 4.5 million is 3.375 million pounds.
4. The advance the developer can draw drops by around 375,000 pounds, not because the units are worth less at retail, but because the exit is tested on the net sale.
5. The developer then contributes more equity, accepts the smaller advance, or runs a retail sales process that lets the loan work off the higher gross figure.

This is why net development value is never a footnote to the sizing conversation. Interest on an exit bridge is normally retained or rolled up instead of serviced each month, indicatively in the region of 0.65 to 0.95 percent per month across a term of 6 to 18 months, and that rolled interest has to sit inside the same value cushion at redemption. When we model a case we start from the valuer's gross development value, deduct to the net figure the exit is repaid from, then fit the gross loan and its rolled interest inside whichever cap bites. A quick indicative check is available on the tool at /tools/net-development-value-calculator/ before the full valuation lands.

Presenting sales evidence so the NDV holds up

Sales evidence is the material that persuades a valuer to set the net development value near the top of its plausible range rather than the bottom, and a developer controls more of it than they often realise. The valuer has to defend a figure to a lender, so the stronger and more recent the comparable evidence, the smaller the discount applied for uncertainty. Thin or stale evidence forces a cautious net figure, a cautious net figure compresses the leverage, and the whole facility tightens from that one weak point.

• Recent completed sales of genuinely comparable units, dated and evidenced, rather than asking prices that never transacted
• Reservations and exchanges on the scheme itself, which are the most direct proof of the price the market will pay
• A realistic and consistent costs of sale schedule, so the valuer is not left guessing at agent fees or incentive levels
• A clear absorption assumption, meaning how many units the market absorbs each month, since a slow sales rate feeds a lower net figure
• Evidence on any bulk or investor bid, if a single-line exit is part of the plan, so the discount is grounded rather than assumed
• A sensible view of purchaser's costs on any investment-valued element, so a build-to-rent net figure rests on real transaction costs

Presented well, this evidence lets the valuer hold the net development value close to the gross figure, which protects the leverage and keeps the exit calm. As a broker and introducer, we place this finance rather than lend, and the Financial Conduct Authority does not authorise us and the exit funding we broker sits outside its remit as unregulated commercial lending. Each figure here is a model rather than a finance offer, and the binding numbers rest on the valuer's assessed GDV, the net development value reached and the funder's own terms.