Quick answer
Joint venture property finance funds a property project undertaken by two or more parties, such as a landowner and a developer, who combine land, money and skills. The funding is built around the venture's structure, each party's contribution and the exit. Ownright Custom Finance arranges joint venture property finance Australia-wide.
Key points
- Suits landowner and developer deals, investor partnerships and syndicates
- The structure of the venture drives what lenders can offer
- Land can count as a contribution towards the project
- A clear agreement and exit plan matter to every lender
- Suits
- Landowners, developers, builders, investors and family partnerships
- Security
- The project property, with guarantees from the parties
- Structure
- Company, unit trust, partnership or unincorporated venture
- Australia-wide
- Yes
What is joint venture property finance?
Joint venture property finance is funding for a project run by two or more parties who pool land, capital, skills or relationships. A typical example is a landowner who contributes a site and a developer who brings the planning, construction and capital. The finance has to suit the venture’s structure, because the lender is lending to the entity or parties behind the project, not simply to a property.
Done well, a joint venture lets each side do what it is best at. Done poorly, it can stall because the money, the paperwork and the partners do not line up. That is where good structuring helps.
Who uses joint ventures?
- Landowners wanting to unlock a site without selling it outright
- Developers who need equity to fund a deposit or margin
- Investors pooling funds for a shared project
- Family groups developing inherited or held land
- Builders partnering with an investor to fund a project
How are joint ventures structured?
| Structure | How it works | Finance consideration |
|---|---|---|
| Unincorporated joint venture | Parties hold interests directly under an agreement | Each party’s liability and guarantees matter |
| Special purpose company | A new company owns the project | Lender usually wants guarantees from directors or owners |
| Unit trust | Parties hold units in a trust that owns the project | Trust deed and trustee details are key |
| Partnership | Partners share the business and liabilities | Partners are often jointly liable |
Which is best depends on tax, risk and the partners’ goals, so take advice from your accountant and a solicitor. Our job is to match the structure to lenders who can fund it.
What do lenders look at?
The agreement. Roles, contributions, decision-making, profit split, funding obligations and exit. Gaps invite questions.
The project. Location, approvals, scope, budget, contingency and expected end value. See development finance and subdivision finance for typical project types.
The parties. Experience, track record, credit and net worth. A first-time developer with an experienced builder partner can be a credible combination.
The equity. Land value, cash contributions and any existing debt over the site. The guide on commercial LVR and valuation explains how lenders look at it.
The exit. Sale of lots, sale of the whole project or refinance onto an investment loan.
Where does the money come from?
A joint venture project often has layers of funding:
- Equity from the parties, including land
- A senior development or construction loan
- Sometimes mezzanine finance to fill a gap between the senior loan and equity
- A second mortgage over another property for some or all of a party’s contribution, where suitable (see second mortgage for investment property)
How these layers fit together depends on the lenders’ rules and the ranking of each security. The guide on first, second and third mortgage ranking helps explain the order of repayment.
What about stamp duty, GST and tax?
Property joint ventures can trigger stamp duty or transfer duty questions, GST considerations and tax outcomes that depend on the structure and the state. State revenue offices and the ATO publish the rules, and your accountant and solicitor should confirm what applies. We focus on arranging the finance once the structure is settled.
How Ownright approaches joint ventures
Trevor Scott and the team bring more than 40 years of finance experience to deals that do not fit a neat box. When land, partners and project funding all need to come together, we map who is contributing what, find the gaps and look at lenders who understand joint ventures. We also look for solutions others miss, such as combining a development loan with a second mortgage to cover a contribution.
We work Australia-wide, and often alongside the client’s solicitor and accountant. For smaller upgrade-and-sell projects, see property refurbishment finance; for build projects, commercial construction loans.
An illustration
Illustrative scenario only. A family owns a large block on the edge of a regional town and wants to subdivide it, but lacks the capital and experience. A local developer proposes a joint venture: the family contributes the land, the developer funds the civil works. A broker could structure a special purpose entity, treat the land as equity and approach lenders for a staged development facility with a clear exit through lot sales.
Mistakes to avoid
- Starting without a written agreement
- Ignoring how guarantees will affect each party
- Underestimating costs and approval time
- Relying on a single exit
- Overlooking duty and GST until late in the process
Documents to have ready
- Draft or signed joint venture agreement
- Entity documents and details of each party
- Project budget, plans and approvals
- Evidence of contributions, including title for land
- Asset and liability statements
Our guides on what documents you need and getting loan ready will help, and the commercial loans hub shows related products.
How do lenders treat different contributions?
Contributions come in many forms: cash, land, project management, construction skill, planning approvals or an existing relationship with a builder. Lenders mostly lend against what can be valued and secured, so land and cash carry more weight than promised effort. If one partner is contributing mostly skills, the agreement should say how that is rewarded, and the finance may need a larger cash input from someone else.
What happens if a partner wants out?
This is a question the agreement should answer long before it comes up. Exit mechanisms might include a buy-out formula, a right of first refusal or a sale of the project. Lenders care because a departing partner can change the guarantors and the security. If you are planning a long project, build the exit into the agreement and tell us about it so the finance matches.
Can a joint venture use a private lender?
Yes, particularly for speed or when the structure does not suit a bank. Private lenders can be more flexible on entity types and land contributions, but they look hard at the exit. We look at both bank-style and private options, and our private lenders in Australia page explains how that market works.
Ready to fund your joint venture?
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How it works, step by step
- 1
Step 1
Share the project outline, who is contributing what and the proposed structure.
- 2
Step 2
We review the numbers, the roles and the exit, and flag gaps lenders will raise.
- 3
Step 3
We approach lenders comfortable with joint venture structures and agree the terms.
- 4
Step 4
Funds settle and, for staged projects, draws are released as milestones are met.
Frequently asked questions
What is a property joint venture?
It is an arrangement where two or more parties combine resources for a property project, such as one party contributing land and another contributing money and development skills. Profits and risks are shared according to an agreement. The legal structure, which might be a company, trust or partnership, affects how finance is arranged.
Can the land be counted as my contribution?
Often yes. Lenders can treat the land's value as equity in the project, particularly when there is little or no debt against it. They will want to see the title, any existing mortgage and how the venture agreement deals with the land. We help present the contribution clearly.
Do all the partners need to be borrowers or guarantors?
Lenders commonly require guarantees from principals of the borrowing entity, and sometimes from landowners who contribute the property. Who signs what depends on the structure and the lender. We explain the likely requirements early so each party understands their exposure before committing.
What documents does a joint venture need?
Lenders typically want a signed or draft joint venture agreement, entity documents, project budget, approvals and details of each party's contribution and experience. A clear agreement that covers roles, decisions, funding and exit makes the application easier. Take legal advice on the agreement itself.
Can a joint venture finance a subdivision or apartment project?
Yes, joint ventures are common in subdivisions, townhouse projects and apartments. The finance is usually a development facility, sometimes with a second layer such as mezzanine. We look at the whole capital stack with you and approach lenders who handle that scale of project.
What is the biggest risk in a property joint venture?
Usually a mismatch between partners on timing, costs, roles or exit, which a well-drafted agreement helps manage. On the finance side, thin margins and weak exit plans worry lenders most. Planning for cost overruns and a delayed sale protects everyone.