The introduction of the Gateway process under the Building Safety Act has reshaped the development timeline for many UK residential schemes, with Gateway 2 in particular proving a costly pressure point.
As most in the sector will know, the three Gateways were introduced post-Grenfell to embed building safety into every stage of a scheme. Gateway 1 at planning, Gateway 2 before construction starts and Gateway 3 at final completion and occupation. Of these Gateway 2 is the most significant hurdle as it prevents work commencing until detailed building control, design and safety documentation are approved for buildings at least 18 metres tall or seven stories and higher.
While widely supported in principle, the process has introduced longer lead times, more front-loaded costs and increased financial pressure on schemes. Delays at this stage can result in developers carrying land for longer periods, incurring higher interest costs on existing finance and facing uncertainty in contractor scheduling and pricing. Although official data is still emerging, anecdotal evidence from Karis clients and more widely across the sector suggests projects affected by Gateway 2 are adding months to pre-construction programmes, particularly for high-rise and complex residential schemes.
The BSR data reported that as of 31st March 2025, the median determination time from submission to decision was 25.1 weeks with an analysis of 42% of failed applications concluding that 50% of existing buildings applications and 45% of new-build applications were rejected.
From a funding perspective, Gateway 2 presents challenges that differ from standard planning. Traditional development finance is typically drawn down in stages after works begin whereas Gateway 2 demands significant expenditure before a spade goes in the ground. This can create a funding gap between securing planning and starting on-site, requiring lenders willing to fund a stage with no immediate construction security in place. The result is a need for deal structures that accommodate extended pre-construction periods, meet lender appetite and protect developer cashflow.
From the lender side the hesitation isn’t about an unwillingness to support projects but about managing a new layer of risk. With Gateway 2, lenders are scrutinising the robustness of applications looking for evidence that design and safety documentation will satisfy the regulator first time alongside the borrower’s liquidity to ensure interest can be serviced through longer pre-construction periods.
Clarity on the exit route is also critical, with a well-structured path into a development facility or long-term finance often making the difference in securing funding. We are finding lenders more willing to engage and on more competitive terms for developers who can demonstrate experienced professional teams, realistic timelines and contingencies for potential regulatory feedback.
At Karis Capital, we are working with developers of all sizes across the UK to secure funding for Gateway 2 costs – either as standalone facilities or structured to flow seamlessly into the main development loan once approvals are achieved.
Recent mandates include supporting a Liverpool-based developer through Gateway 2 for a significant residential scheme now expected to commence in Q4, and arranging a facility in Milton Keynes designed to transition directly into the build phase, with a lender providing a single funding package covering both Gateway 2 and construction costs. This approach reduces complexity and avoids the need for refinancing between stages.
We are also working with a developer in the North who, having recently achieved planning, is using a £600,000 bridge loan secured against the uplifted land value to fund their Gateway 2 process. The uncertainty remains, however, as to whether this facility will be sufficient, and how long it will need to be in place, before moving them onto a development product to commence the build phase.
As with any specialist funding requirement, the key lies in structuring transactions that meet the scrutiny of increasingly cautious lenders, many of whom are still developing their approach to the Gateway process. By aligning projects with funders experienced in, or with a genuine understanding of, this space and ensuring the application is supported by the right professional teams, developers can mitigate delays and control costs during this critical stage.
Karis Capital brings together specialist lenders who understand the Gateway 2 process alongside valuers, lawyers and other key professionals with expertise in these requirements, ensuring that transactions are structured and executed in a way that supports both the successful completion of Gateway 2 and the delivery of the scheme itself.
Kimberley Gates is director of client partnerships at Karis Capital
