Subdivision and apartment construction are connected parts of a development, but they are not interchangeable funding purposes. A facility for acquiring land or completing civil works does not automatically fund the apartment build. The finance plan needs to show what each stage costs, when funds become available and how the debt will be repaid.
This guide covers business-purpose development scenarios in Victoria. It is general information, not a loan offer or legal, tax or planning advice. Lending remains subject to assessment, valuation, documentation and lender criteria.
Separate the project into fundable stages
- Site acquisition and holding: establish ownership, existing debt, planning status, holding costs and the time needed to reach the next milestone.
- Subdivision and civil works: identify survey, engineering, servicing, authority, legal and registration costs, and the works needed to satisfy conditions.
- Apartment construction: prepare the building contract, construction budget, builder information, programme, contingency and drawdown requirements.
- Completion and exit: allow for remaining approvals, title registration, settlement timing, selling costs and debt release arrangements.
A lender may consider a combined facility or separate stages. Do not assume later construction funding is committed because an earlier land facility has been approved. Review the conditions, maturity dates and transition costs before taking on debt.
For the servicing and subdivision stage, see our land subdivision finance guide. For the broader build and capital structure, see property development finance.
Connect Victorian approvals with the funding timetable
A plan of subdivision creates parcels that can be dealt with separately. For an apartment project, ask your licensed surveyor and planning adviser how the proposed lots, common property and any owners corporation fit the approved development.
Victoria’s planning guidance distinguishes a planning permit from subdivision certification and registration. Certification and a planning permit application can proceed in parallel, but a statement of compliance cannot precede certification and is required before the plan is registered. Confirm the requirements for your particular proposal with the responsible authority and your advisers.
Use the official Victorian planning permit guidance and Land Use Victoria subdivision guidance as starting points. Planning approval alone should not be treated as evidence that titles, construction approvals or lender drawdown conditions are complete.
Keep LVR, loan-to-cost and usable funds separate
Loan-to-value ratio (LVR) compares debt with the value the lender accepts. Loan-to-cost (LTC) compares debt with the costs the lender accepts. The valuation basis may be current land value or an assessed completed value; the eligible cost definition also matters. A percentage of value is not the same as a percentage of project cost.
Hypothetical example, not lending terms: assume accepted completed value is $10 million and accepted project costs are $8 million. An illustrative 65% value cap gives $6.5 million, while an illustrative 70% cost cap gives $5.6 million. If both limits apply, the lower cap is $5.6 million before other constraints. Against those assumed costs, the gap is $2.4 million. This is not a statement that a lender will offer either percentage.
Reconcile existing land equity, cash already spent and additional cash still required. Retained interest, fees, existing debt payouts and ineligible costs can reduce usable funding. Avoid counting costs or equity twice, and confirm whether funds are available upfront or only through approved progress draws.
Build a feasibility that survives delays
The base case should include land and transaction costs, professional fees, civil works, construction, authority charges, finance costs, selling costs and contingency. Obtain tax advice on GST and the treatment of project receipts and expenses.
- Test lower sales proceeds rather than assuming every apartment achieves the target price.
- Model a longer approval, construction and settlement programme, with the resulting holding and interest costs.
- Allow for unexpected works and explain who supplies additional equity if the budget increases.
- Check the cash needed between contractor payment dates and lender drawdowns.
Run your initial numbers in our development feasibility calculator. It is a planning tool, not a valuation, lender approval or substitute for a project-specific feasibility prepared with your advisers.
Prepare an assessment file
- Site address, title, contract, ownership structure and current finance statements.
- Planning permits, conditions, plans and the surveyor’s subdivision and registration programme.
- Detailed sources-and-uses budget, cash-flow forecast and evidence of available equity.
- Civil and building contracts, programme, contractor experience, insurance and quantity-surveyor material where required.
- Market evidence, presales or stock schedule, proposed settlement timetable and repayment strategy.
Identify outstanding information rather than presenting estimates as confirmed facts. The lender may request further evidence or impose conditions before approval or any drawdown.
Plan repayment before committing
If repayment depends on apartment sales, allow for the requirements for settlement and confirm the lender’s release price for each lot. Sale proceeds may need to reduce debt before the developer can retain surplus cash. If the exit is refinance, test whether the completed property and borrower are likely to meet the replacement lender’s requirements; refinancing is not guaranteed.
Compare the whole facility: interest calculation, establishment and legal costs, monitoring fees, guarantees, drawdown conditions, extension provisions and default consequences. Mezzanine debt and equity participation are different capital arrangements, not automatic substitutes for a senior funding shortfall. Obtain independent advice on priority, control, cost and repayment obligations.
Discuss your Victorian development
Send Basic Finance Loans your development scenario, including the site, current stage, approvals, budget, equity, funding requirement and proposed exit. We can identify the information needed for an assessment and discuss potential funding pathways, subject to lender criteria.