A stalled project is not the end of a development. With early action and the right mix of capital, most can still be finished and sold.
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Australian developers are under real pressure. Construction again had more insolvencies than any other industry in 2025–26, with 3,472 construction companies entering external administration or having a controller appointed. When a builder fails, costs blow out or a lender gets nervous, the project can stall fast. This guide covers the options available to developers who need finance to get a project over the line.
Why development projects stall
Most stalled projects trace back to a handful of causes:
• Builder insolvency: A collapsed builder leaves unfinished work, unpaid trades and a scramble to appoint a replacement, usually at a higher price.
• Cost overruns: Materials, labour and variations can push the cost to complete well beyond the original budget and loan facility.
• Slow presales or falling values: If presales miss the lender’s hurdle or a revaluation comes in lower, the loan-to-value ratio can breach covenants.
• Loan maturity: Construction delays can push completion past the facility’s expiry date.
• Lender appetite: Banks have pulled back from higher-risk development lending, and private lenders now play a much bigger role. An ASIC-commissioned review estimated that around half of Australia’s roughly $200 billion private credit market is tied to real estate, much of it construction and development loans.
The warning signs often show months before a crisis: cash running thin before practical completion, a loan expiry approaching with no clear refinance, or a builder slowing work and chasing payments.
Act early: talk to your lender first
The single biggest factor in a good outcome is timing. Once a loan is in default, the lender controls the process, and receivers can be appointed.
Receiverships in the construction sector rose sharply in 2025–26 as private lenders moved faster on distressed projects.
Approach your existing lender while you still have options. Bring a clear explanation of the problem, an updated budget and a plan. Many lenders would rather grant a short extension or standstill than take over a half-built project.
If the developer entity may be unable to pay its debts, directors should also get advice on their duty to prevent insolvent trading. ASIC’s Regulatory Guide 217 explains how the safe harbour provisions can protect directors who pursue a course of action likely to lead to a better outcome than administration or liquidation.
Finance options to complete a stalled project
The right structure depends on how far along the project is, the size of the funding gap and your relationship with the current lender.
Cost-to-complete funding: A lender provides the capital needed to finish construction, often alongside or in place of the existing facility. It suits projects that are well advanced but short on funds after a builder failure or cost blowout.
Refinancing the senior loan: A non-bank or private lender takes out the existing facility, usually with more flexible terms, a longer maturity or a higher loan-to-value ratio. Expect higher interest rates and fees than a bank.
Mezzanine finance: A second-ranking loan sits behind the senior debt to fill the gap between what the senior lender will provide and the developer’s equity. It costs more but avoids giving up ownership.
Preferred equity or a joint venture partner: An investor injects capital in exchange for a priority return or a share of profits. This can preserve the project when debt alone won’t stretch far enough.
Residual stock loans: If some lots are complete but unsold, a residual stock loan lends against that finished stock. It can repay construction debt or release equity to fund the remaining stages.
Selling down part of the project: Selling some lots, a stage or a share of the site can reduce debt and bring in a capital partner.
What lenders need to see
Rescue lenders move quickly, but they need a clear picture of the risk. Have these ready:
• An independent quantity surveyor (QS) report with a realistic cost to complete and contingency.
• A current valuation, including the “as if complete” value and, where relevant, the value of completed stock.
• Your presale position, including which contracts are firm and their settlement dates.
• A credible exit strategy, whether that’s settlement of presales, sale of stock or refinance to an investment loan.
• Your track record and an honest account of what went wrong. Lenders are more comfortable when developers are upfront.
Protecting presales matters. In both NSW and Victoria, a developer generally needs the buyer’s consent or a Supreme Court order to rescind a residential off-the-plan contract under a sunset clause. Keeping buyers informed and on side helps preserve the contracts your lender is relying on.
Getting your project over the line
Finance distress is stressful, but it is also common, and stalled developments are rescued every week. The developers who come through best act early, get the numbers in order and work with a lender who understands distressed projects.
If your project has stalled or you can see trouble ahead, talk to our team for a confidential conversation about your options.
This article is general information only and does not take into account your circumstances. It is not financial, legal or tax advice. Seek professional advice before acting.
