Cushion to Target Margin on Cost is a capital cushion metric used in property development finance UK to assess resilience against cost overruns and market stress. It measures the difference between a project’s achieved or forecast margin on cost and the lender’s minimum required margin. A positive cushion demonstrates that profitability exceeds the lender’s target, providing comfort that the scheme can absorb unexpected increases in build costs or reductions in sales values. This ratio is often reviewed alongside Loan to Value (LTV) and Debt Service Cover measures to assess risk and developer strength.
This sits beneath Capital Cushion Metrics, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Margin of Safety (% buffer before loss), as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Cushion to Target Margin on Cost is most commonly encountered in connection with Secured Note with PG within the property development capital stack.
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