Financing Your Permitted Development Project: A Guide to Success🏡
Permitted development projects are an exciting opportunity for both seasoned developers and newcomers in the property industry. 🌟 While many developers and investors are keen to purchase properties with permitted development rights, figuring out which lenders offer the right financing can be tricky. Traditional light, medium, and heavy refurbishment loans often don’t cover permitted development, or the loan structure (drawdowns/initial advances) isn’t ideal for this type of project. 💼
In this guide, we’ll break down the financing options available, explain permitted development rights, and share key considerations for funding your project. Let’s dive in! 🏊♂️
🏗️ Understanding Permitted Development Rights
Permitted Development Rights (PD) allow property owners to modify or redevelop residential and commercial buildings without going through the full planning permission process. 🏢 These government-granted rights cover a variety of developments, from home extensions to commercial-to-residential conversions. 🏠
However, there are exceptions. Properties in conservation areas, National Parks, and other designated locations often have stricter regulations. Similarly, flats and listed buildings may not qualify for PDR, requiring additional permissions before work can commence. Always verify with your local planning authority before proceeding or apply for a Lawful Development Certificate. 📜
🚫 When PDR Does Not Apply: Article 4 Directions
In some regions, local authorities issue ‘Article 4’ directions, which restrict permitted development rights to maintain the character of an area. 🏞️ If your project is affected, you’ll need to apply for planning permission, even if it would normally fall under PDR. Checking early on to see if you’re in an Article 4 area and understanding what’s restricted can save you time and avoid unexpected hurdles. ⏳
What Works Are Affected by Article 4 Areas?
Replacing windows and doors 🪟
Re-roofing 🏠
Certain domestic extensions 🏡
New fences and walls 🧱
Building works on certain sites 🚧
Changes of use 🔄
✅ Prior Approval: A Crucial Step
Even when full planning permission isn’t required, many PDR projects still need ‘prior approval.’ This ensures the project meets local standards concerning transport, environmental impact, and structural integrity. For example, converting an office into apartments will require prior approval to confirm the suitability of living conditions, access, and fire safety. 🔥
If a site lacks prior approval, it may be valued at its vacant possession price rather than its potential worth. This can impact your financing, as lenders may not advance funds until prior approval is secured. It’s often challenging to achieve this before a sale, as vendors may not want to go through the process. 🤔
🏠 Key Permitted Development Projects and Their Restrictions
1. Single-Storey Extensions
Must not exceed 50% of surrounding land.
Must not exceed height limits.
Must not encroach on public-facing elevations.
2. Loft Conversions
Must stay within specified volume limits.
Must avoid front-facing roof alterations.
Must match existing building materials.
3. Outbuildings & Porches
Height, size, and location restrictions apply.
Must not be too close to highways or shared boundaries.
4. The Larger Home Extension Scheme
Allows extensions beyond standard limits with prior approval from neighbors.
💰 Funding Your Permitted Development Project
Financing for PD projects differs from traditional new builds. A key distinction is the balance between land costs and construction expenses. Unlike ground-up developments, where construction often equals or exceeds land value, PDR projects typically involve higher purchase costs. This means borrowers often want a higher advance on day one to minimize their equity requirements. 💸
The security is also typically either smaller than it will be on completion or is a different use class, so you need a lender who understands permitted development and the upside on completion of the project. 🏦
🏦 Choosing the Right Lender for Permitted Development
Some bridging and development lenders finance PDR projects, but many are hesitant as the finished product can sometimes be of lower quality than a purpose built ground-up development or refurbishment. If your development involves new-build elements, extensions, or more than four units, working with a lender who specialises in permitted development is essential to avoid deal breakage costs. 💼
What to Consider When Selecting a Lender:
Loan-to-Value (LTV): Some lenders offer up to 80% of the net project value.
Interest Rates: 80% net LTV can start as low as 0.89% per month.
Expertise: Development lenders with experience in conversions and permitted development provide more tailored solutions.
Speed of Funding: Fast approvals can be crucial for securing deals and progressing projects efficiently. ⏩
🤝 Secure Your Funding With the Right Partner
Navigating the complexities of financing a permitted development project requires the right expertise. At [Your Company Name], we specialize in securing funding solutions tailored to your project’s needs. With access to competitive rates and high LTV financing, we help developers maximize their investment potential. 💪
Why Choose Us?
✅ Up to 80% LTV on permitted development projects
✅ Rates starting from 0.89% per month
✅ Fast approvals and expert guidance
✅ Extensive lender network for optimal financing options
If you're looking to fund your next permitted development project, get in touch with us today. Our team is ready to help you secure the best financial solution for your venture. 🚀
Permitted development projects can be a game-changer for your property portfolio, but securing the right financing is key to success. Let us help you turn your vision into reality! 🌟
