Typically used in Development Finance to describe the value added to a site before Development commences, typically through Planning Gain. The value add has been greater than the spend. As an example; if you buy a site at £ 2m, and spend £ 500k on planning, which when the Planning Permission is granted the site is worth £ 3.5m, we would say that the Sweat Equity value was £ 1m. Lenders approach to Sweat Equity varies widely, with some not recognising it all. It can be a valuable tool for Developers who are looking to maximise their Equity.
