The Interest Coverage Ratio Buffer (ICR Buffer) in property development finance UK is a safety margin added to a lender’s minimum ICR requirement, typically expressed in basis points (bp). It acts as a financial cushion, allowing developers to absorb interest rate increases or temporary revenue shortfalls without breaching covenants. Calculated as the difference between projected ICR and the lender’s minimum ICR, this buffer supports risk management, enhances project resilience, and reassures investors that the development can service debt under stress scenarios. It is particularly relevant for short-term construction loans or development finance facilities with variable interest rates.
This sits beneath Interest Coverage, introducing a more specific variant of the measure without changing its core interpretation.
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