Land Finance
Fund land acquisition ” with or without planning ” and bridge through to development finance once consent is secured.
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No upfront fees · Business enquiries only · Min. £25,000
What is Land Finance?
Land finance is short-term secured lending against a plot, site or parcel of land, used to fund acquisition or to release equity from land already held. Lenders distinguish sharply between land with planning permission (significantly more valuable and therefore attracting higher LTVs) and land without planning (where risk is higher and LTVs lower). Land finance is typically a precursor to development finance ” once planning is secured, the bridge converts to a full development loan.
- Agricultural land, brownfield sites, plots with planning
- Greenfield land without planning (lower LTVs)
- Outline and full planning permission both accepted
- Bridge through the planning gain period
- Exit to development finance or sale with planning
How Does Land Finance Work?
Land Acquisition
The bridge funds the purchase of the land or site. The lender values the land in its current state and sets the loan accordingly.
Planning Application
The borrower submits a planning application during the bridge term. The lender understands that planning gain is the primary value driver.
Planning Granted
Once planning is secured, the land value increases significantly. The bridge may be refinanced to reflect the new value, or extended while development finance is arranged.
Exit
Land with planning is sold at a profit, or the bridge converts to a development loan once the development appraisal stacks at the planning-granted value.
How is Land Finance Secured?
Land finance is secured by a first legal charge over the land. Without planning, lenders limit LTV to reflect the illiquidity risk ” land is harder to sell quickly if the loan defaults. With planning, higher LTVs are available as the market for consented land is deeper.
Exit Strategy
All lenders require a credible exit strategy before funds are released. Common exit routes include:
- Sale of the land with planning permission (planning gain)
- Conversion to development finance once planning is secured
- Sale to a housebuilder or developer
- Joint venture with a development partner
Is Land Finance a Good Idea?
Advantages
- Enables acquisition of sites before competition can react
- Planning gain can create significant value from relatively modest sites
- Bridges the gap between land purchase and development finance
- No monthly repayments during the bridge term (retained interest)
Considerations
- Land without planning attracts low LTVs ” typically 50“60%
- Planning risk ” refusal leaves the borrower holding land with limited value
- Longer bridge terms required for planning applications (12“24 months)
- Narrow lender market for unusual or agricultural land
How to Secure Land Finance
Assess the Planning Probability
A pre-application discussion with the local planning authority or a planning consultant gives a realistic view of consent probability before committing to a purchase.
Instruct a Specialist Solicitor
Land transactions involve complex title issues ” ransom strips, rights of way, restrictive covenants and s.106 obligations. A solicitor experienced in development land is essential.
Prepare an Appraisal
Show the projected GDV and development profit at planning. This demonstrates to the lender that the investment makes sense and the exit is credible.
Submit Enquiry
Provide site location, area, current planning status, intended use and exit. We identify lenders with appetite for land finance.
How Much Can I Borrow?
Land LTVs vary significantly based on planning status.
- Land with full planning: up to 65“70% LTV
- Land with outline planning: up to 60“65% LTV
- Greenfield / agricultural without planning: 50“55% LTV
- Brownfield without planning: up to 55“60% LTV
- Minimum loan: £100,000
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How Quickly Can I Get a Loan?
Land bridges typically take 3“5 weeks from application to drawdown, reflecting the complexity of land title due diligence.
Eligibility Criteria & How to Apply
- UK-based developer, limited company or LLP
- Land in England, Wales or Scotland
- Planning status clearly defined at application
- Credible planning strategy if planning not yet secured
- Development appraisal demonstrating viable scheme
- Adverse credit considered on merit
- Minimum loan £100,000
9 Example Uses of Land Finance
Brownfield Site
A former industrial site with planning for 20 houses is acquired. Land bridge funds purchase; development finance follows on start of construction.
Planning Gain
Agricultural land adjacent to a village is acquired without planning. Bridge funds the purchase; planning is secured within 12 months and the site is sold at significant uplift.
Infill Plot
A small infill plot with planning for 2 houses is acquired in a desirable village. Bridge funds purchase; self-build development loan covers construction.
Option Exercise
A developer exercises an option to purchase a site at an agreed price. A land bridge funds the option exercise ahead of planning submission.
Large Residential Allocation
A strategic land allocation for 200 units is acquired by a developer. Specialist lender with appetite for large land transactions.
Greenfield Promotion
A landowner promotes agricultural land through the planning process. Bridge raised against the land at pre-planning value.
Site Assembly
Multiple adjacent plots are assembled under single ownership. A land bridge funds the assembly ahead of a planning application for the combined site.
Permitted Development Site
A commercial site with confirmed PD rights is acquired. Bridge funds the purchase; conversion finance covers the works.
Adverse Credit Developer
An experienced developer with historical CCJs acquires a consented site. Specialist lender focuses on the site quality and development track record.
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