Start With Scope, Not With a Lender

Small-scale golf property development in the UK covers more ground than people expect. It might be six timber lodges tucked behind the ninth fairway, a disused greenkeeper's building turned into four holiday lets, a short-game academy with a small clubhouse and cafe, or a phased clubhouse rebuild with a handful of apartments above. The common thread is that the numbers are usually too small for institutional development finance and too large for an overdraft and a hopeful conversation with the bank.

Before you approach anyone for money, be precise about what you are building, who will use it, and when it starts earning. Golf developments carry a particular complication: the course itself is often the trading business funding the project, so any disruption to play has a direct effect on cash flow. Lenders and investors will ask about that in the first five minutes. Have an answer ready, in numbers rather than adjectives.

Bank Lending: What Actually Gets Approved

High street banks are cautious about golf, but specialist lenders and a few regional banks will look at a well-structured scheme. Expect them to want equity of 30 to 40 per cent of total cost, which can sometimes be satisfied by the land value rather than cash. Development finance is typically drawn in stages against a quantity surveyor's certification, with interest rolled up, an arrangement fee of around 1.5 to 2.5 per cent, and a term of 12 to 24 months.

• Full planning consent, with conditions discharged or a credible timetable for doing so.
• A costed build, supported by a QS report rather than a builder's verbal estimate.
• Evidence of exit, whether pre-sales, reservations or a refinance valuation.
• Personal guarantees, which are common and should be negotiated rather than accepted.
• A clear story on trading, showing how the course keeps running through the works.

Once built, the asset usually refinances onto a commercial mortgage at 60 to 70 per cent loan to value. Lenders will want to see that the income is documented, not imagined.

Private Investors, Loan Notes and Member Syndicates

Many golf clubs have members who would rather invest in the club than watch land be sold to fund a shortfall. That goodwill is valuable, but it needs structuring properly. A special purpose vehicle with clear shareholdings, or a secured loan note with a fixed rate and a defined term, is far safer than an informal arrangement recorded on a handshake and a WhatsApp message.

Be honest about risk. Never accept money from someone who cannot afford to lose it, and be clear about what happens if the programme slips by six months. Enterprise Investment Scheme and Seed Enterprise Investment Scheme relief can apply to some trading elements, but holiday letting is largely excluded, so take specialist tax advice before promising relief to anyone.

Phasing Construction to Spread Risk

Building four lodges and letting them trade before starting the next four is the single most effective way to de-risk a small scheme. Phase one generates revenue, proves the concept to a lender, and gives you a genuine trading history for the refinance. Phased planning applications can also reduce the up-front professional fees and allow conditions to be discharged in stages.

Sequence the work around the golfing calendar. Major groundworks and noisy trades belong in November to February, when visitor numbers are naturally low. Keep a temporary route to the first tee, keep the bar open, and tell members what is happening and when. A development that quietly strangles its own income stream is the one that runs out of money.

Cash Flow Forecasts That Survive Scrutiny

Build your forecast month by month, not annually. Include professional fees, Community Infrastructure Levy and Section 106 contributions, VAT and the timing of reclaims, and a contingency of 10 to 15 per cent. Add an allowance for a wet winter, because you will get one.

On the income side, remember UK seasonality. Green fee and visitor income concentrates between April and October, while lodge bookings peak in summer and around Christmas and New Year. Test the model at 70 per cent of your base case and check the scheme still services its debt. If it does not, the funding structure is wrong, not the weather.

Exits, and the Team That Delivers Them

There are three usual exits: sell the completed units, refinance onto a long-term mortgage and retain them as a rental portfolio, or a blend of both. Refinancing is often overlooked, yet it is frequently the most tax-efficient route for a club that wants to keep control of the asset. Retention requires management capacity, so be realistic about whether you have it.

Surround yourself with a solicitor experienced in property, a quantity surveyor, a planning consultant, and an accountant who understands property VAT. Their fees look steep until you compare them with the cost of a stalled site. Get the structure, the numbers and the exit right at the outset, and a modest scheme beside the eighteenth can be one of the most quietly profitable projects on the course.