He added: “There is a balance of risk in any transaction. Banks like us provide senior debt. We generally don’t provide mezzanine funding and neither are we any client’s joint venture partner. There is an expectation that if the bank is providing a senior debt, a borrower usually provides equity, usually at a level of 10% – 20% of total costs. So, it’s possible in particular circumstances but it’s likely to be expensive. It can, however, work in the right structure.”

For Maxim Cohen (pictured right), CEO of UK finance Group, 100% development funding must always be assessed on a case-by-case basis. “This is not a product that should be offered as a blanket solution,” Cohen said. “It requires individual underwriting, tailored to the specific developer, their track record, personal guarantee exposure, and project rationale. I’ve seen firsthand how 100% funding can create unexpected risk. One client was effectively fully funded — not because they secured a formal 100% product, but because the initial valuation and gross development value were overly optimistic.” As a result, they borrowed more than they should have. When it came to exiting the loan, the final market valuation came in significantly lower, and they were unable to refinance.” He added: “We ultimately had to secure leverage against other properties to repay the loan. This highlights a key risk with 100% funding – if the end valuation doesn’t match expectations, the client may struggle to exit; a critical factor that must always be considered at the outset.”

Latest data shows a growing trend for zero deposit mortgages among residential buyers too. Some £197m worth of no-deposit mortgage funding was issued last year, according to chartered accountants and business advisers Lubbock Fine. Borrowing levels, though, are still far below financial crisis-era levels, where Northern Rock offered 125% mortgages.