Residual stock loan
What is a residual stock loan in property development?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A residual stock loan refinances the units left unsold when a development is finished, after the construction loan has been repaid from the sales that settled. It lets a developer hold the stock and sell it over time rather than at a discount, and lenders size it on the value of the remaining units, often more cautiously than an investment property, because unsold units earn little until they are sold. A large residual book is itself a signal that buyers did not want the product at the prices the feasibility assumed.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
- Loan to cost (LTC)
- Presales
- Interest reserve
- Quantity surveyor (QS)
- Retention (construction)
- Peak debt
- Cost to complete
- Sunset clause (off-the-plan sale)
- Practical completion
- Capitalisation rate (cap rate)
- Development feasibility
- Release price
- Contingency (construction budget)
- On-completion value
- Capitalised interest (funded interest)
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