Assetz Capital has introduced a major update to its development finance product, allowing full planning gain to count as a valid equity contribution.

The move reduces the cash developers must inject into schemes and is aimed at supporting more small and medium-sized housebuilders to deliver new homes.

Andrew Fraser, chief commercial officer at Assetz Capital, said: “By recognising planning gain as a genuine contribution, we’re lowering the cash burden on developers and enabling them to deploy maximum leverage.

“This means cash may be retained for further schemes, which in turn will boost housing output.”

Under the new policy, developers who have invested time and money to secure or enhance planning approval can use the uplift in site value as part of their equity.

“Each transaction must be supported by full evidence of acquisition costs, planning investment and the resulting increase in value.

The lender has made clear that discounted site purchases will not qualify and that eligible projects must be fully funded, straightforward and located in saleable areas across the UK.

Assetz Capital said the update does not alter its headline loan terms, which remain at up to 72.5% loan-to-gross-development-value and 87.5% loan-to-cost. The firm’s existing project monitoring framework will continue to apply.