Written by Justin, Principal · 26 October 2026
Our guides are researched and drafted with digital tools, then written and approved by Justin, Principal, from his own experience.
Gateway 2 can cost a developer a great deal before a brick is laid. I am now seeing a contractor step in as a joint venture (JV) partner to help carry it. It is a new nuance, and a very interesting one.
Picture the cash-flow sheet. The building safety approval is in progress. The costs are real, and the build has not started. Now picture a contractor who joins the scheme and takes a share of the profit.
Gateway 2 (building control approval from the Building Safety Regulator before work starts) applies in England to higher-risk buildings: at least 18m tall or at least 7 storeys, with at least 2 residential units (care homes and hospitals too; hotels are excluded). Below that, it does not apply. More in our Gateway 2 guide.
A joint venture (JV) is an arrangement between two parties to work together on one scheme.
The 30-second version
- What I am seeing: a contractor joins the scheme as a JV partner on a Gateway 2 project.
- What the contractor gets: in the schemes I am seeing, assured work, in return for its commitment to the scheme, and a share of the profit.
- What the contractor gives: it helps fund, if not fully funds, the Gateway 2 costs. It defers a full 3% retention, plus a retention on some, if not all, of its profit, until the lender is repaid.
- Why lenders can like it: it ties the builder in.
What I am seeing
I have three ongoing schemes with a contractor as JV partner. One is around £20m and one is well over £50m. Two of the three are Gateway 2 schemes. No names, for obvious reasons.
In these schemes, the contractor is assured of the work, in return for its commitment to the scheme. It helps fund, if not fully funds, the Gateway 2 costs, and takes a share of the profit. This sits alongside joint venture development finance.
The part lenders like
In these schemes the contractor defers a full 3% retention, plus a retention on some, if not all, of its profit, until the lender is repaid. (A retention is a share of a contractor's payments that is held back.)
In my view, that makes a big difference to cash flow. It also ties the builder in, and, in my experience, lenders like that.
Is a contractor JV right for your scheme?
| Your situation | Points to consider | What is commonly done next |
|---|---|---|
| Gateway 2 costs are heavy before the build starts | Whether a contractor partner could help with the costs | Talk to a contractor you trust early |
| Cash flow is tight until the build is paid for | Deferring retention and profit can ease it | Show the lender the JV terms with the appraisal |
A JV can tie the builder in. Whether the lender is comfortable is for the lender to decide.
Before you approach a contractor: five questions
- What will the contractor fund, and what will it defer until the lender is repaid?
- How is the profit share set out?
- Does the JV agreement fit with the building contract the lender's solicitor will check?
- Has the lender seen the structure before you sign?
- Do you have a solicitor who can draw up both?
Your next move
Tell us the scheme and who the contractor is, and we can talk through the Gateway 2 position and the contractor's role. It is a confidential, no-obligation chat.
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