Planning Gain Finance

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Using bridging loans to secure planning permission

If you’re looking to raise finance against a property or piece of land while you apply for planning permission, we can help.

These facilities are designed to fund the planning process and can be offered against almost any security, as long as it has planning potential. If you’d like learn more about this type of lending, our bridging homepage sees bridging loans explained further.

We offer many facilities, and our experienced team can recommend the most suitable, depending on your circumstances.

Read on below to find out more.

Criteria

Below are the main criteria points to consider when taking out planning gain finance.

1 Up to 75% Loan to Value (or 100% with additional security).
2 Property in a poor state of repair considered.
3 Rates from 0.48% per month.
4 Loans from £25,000 with no maximum loan size.
5 Borrow from 1 month up to 24 months.
6 Any security considered.
7 Interest can be rolled into the loan.
8 Loans with no early repayment charges available.
9 We will consider any exit route.
10 Refurbishment or conversion accepted.
11 Adverse credit accepted.
12 Loans available throughout the UK.

What is planning gain?

Planning gain is the process of applying for planning permission against a property or land, and it being granted.

Planning gain is a strategy used by property investors to increase their returns.

How much can I borrow?

We can fund up to 75% of the current market value of the security property, if that’s less than 65% of the hope value. We can offer facilities such as the above for loans between £100,000 and £1,000,000.

If you’re looking for more, we can lend up to 100% of the current open market value, if you’re able to offer additional security.

How much will it cost?

The interest rate charged will depend on what is currently on the site and the loan to value requested. We offer bridging loans on the following terms:

Security Max LTV Rates From
Residential (Unregulated) 75% 0.48%
Residential (Regulated) 70% 0.48%
Commercial 70% 0.65%
Land With Planning 65% 0.75%
Land Without Planning 50% 1.00%

Applications are also subject to a lender arrangement fee, usually 2% of the loan amount. This is sometimes reduced where the requested loan amount is large and can be as low as 1% in some cases.

These loans are usually offered for 12 months, or longer, to give you sufficient time to gain planning and refinance/sell.

Where things move quicker than this and the loan can be repaid early, you will usually only pay interest for the period that the funds have been borrowed, rather than for the whole term.

How long does planning gain finance take to complete?

We can fund your bridging loan the same day, where the valuation and legal pack are already fully completed, although this is very rare.

In general, you can expect your planning gain bridging loan to take between 5 days – 2 weeks to complete.

Where there are complexities with the project, or previous declined planning applications, your application may take a little longer.

How does it work?

This type of borrowing is designed to allow investors to purchase sites, either land or property, that has potential for planning permission.

Once the site is purchased, a planning application is then submitted. Once this is approved, the site will generally have increased in value and can be sold for a profit or developed by the borrower.

Finance is only generally used to fund the planning process. Once permission has been granted, development finance is generally used to fund the development project.

How will my application be assessed?

The lender will need to be comfortable with the security offered in its current form. This will protect them in the event of planning permission being declined.

In most cases, the lender will want to know what your backup plan is should your planning application be refused.

Some lenders may have experience in planning gain and will look at the viability of your proposed application. To give them a picture of this, they will tend to look at the following:

  • The planning history of the site/land. Previously declined applications may indicate that the planning is difficult to achieve on the site.
  • Is the site in the local plan?
  • Is there precedent locally which would suggest that your application is likely to be successful?
  • Is the proposed application inkeeping with the area?
  • Do you or your architect have experience of these types of applications in your area?

Of course, this list is not exhaustive, but will give you some idea of the checks undertaken.

Your exit strategy is key to the success of your application

They key to a successful bridging loan application is your ability to repay the loan at the end of the term.

For planning gain applications, the lender will want to see that you’re able to repay the loan both in the evet of planning being successful – and if it isn’t.

Sites that have failed planning applications may take a little longer to sell and as such, the lender will want to ensure that there is plenty of time to exit. This may result in the lender insisting on a slightly longer term for the loan.

Can you fund my development once planning has been granted?

Yes, we’re able to offer finance for property development for most projects and can help both experienced and inexperienced developers.

Where an agreement in principle is required from a development finance lender to prove your exit strategy, we will be able to arrange this for you.

about-the-author-gary-hemming

About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director

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