Bridging finance for land while planning is still being decided

This suits people who need to act before consent exists. The classic case is buying land now to control it through the planning process, rather than waiting and losing the site to another buyer once permission lifts the price.

We commonly see it used to:

• Buy a site with an application already submitted, or one you intend to submit.
• Hold land through an appeal after a refusal, where you believe the decision will be overturned.
• Refinance an existing loan on land that is partway through the planning process.
• Free up capital tied in a site while you pursue an uplift in its value.

It is used by developers, promoters, land traders and investors treating the land as a commercial venture, so this is unregulated commercial lending outside the FCA's regulated-mortgage perimeter. Where a proposed deal would be a regulated mortgage contract, for example where it is tied to a borrower's own home, we refer it to an appropriately authorised firm. Nothing here is financial, legal, planning or tax advice. Because consent is not guaranteed, this stage calls for a clear head about both the upside and the risk.

Hope value is the extra worth the market attaches to land because of the prospect of planning permission, over and above its existing use value. It is real, but it is not certain, and a lender treats it with care.

Before consent, a lender bases the loan on the land's current value, not the fully consented value it might reach later. A prudent valuation may recognise some hope value where the planning case is strong, but a lender will not lend as if permission were already in hand. That is the core difference from lending against a consented site, and it is why leverage sits lower at this stage.

How much weight a lender gives to hope value depends on the strength of the planning position: allocation in the local plan, pre-application feedback, professional planning support and the track record of the applicant all help. The clearer and better evidenced the route to consent, the more comfortable a lender is, and the better the terms we can place. Where the planning story is thin, expect a lender to lend against existing use value only and to price accordingly.

Because permission is not yet granted, a lender is underwriting your planning strategy as much as the land. The case has to stand up on its own merits, so presentation matters.

In practice we help you put together:

• A clear planning strategy: what has been or will be applied for, the planning consultants involved, and any pre-application or officer feedback.
• A realistic timescale to a decision, including the possibility of committee, conditions or appeal.
• Evidence of the site's current value and any support for hope value.
• A credible exit: refinance onto better terms once consent lands, sale of the consented site, or a move into development finance to build.
• The borrowing entity, its experience and who stands behind the loan.

The stronger the evidence that consent is likely, and the clearer the plan for repaying whatever the planning outcome, the more confidently a lender can proceed. A vague timeline or an exit that depends entirely on permission being granted will make a lender nervous, so we always test the plan for what happens if the decision is delayed or refused before we take it to market.

Pre-consent lending is priced for the planning risk that remains, so both leverage and cost sit at the more cautious end of the range.

As indicative bands: loan to value is typically around 50% to 65% of current value before consent, against roughly 65% to 75% once permission is granted. Pricing for land bridging generally runs around 0.75% to 1.1% per month, with pre-consent cases tending towards the higher part of that band because the lender is taking a view before the value is proven. Interest is usually rolled up rather than serviced, keeping cash free while the site produces nothing.

Facilities generally range from £100k to £25m, over terms of 1 to 36 months chosen to cover the expected planning timeline with some headroom for delay. A strong, well-evidenced case can improve on these numbers, and once consent is granted many borrowers refinance onto keener terms, sometimes towards senior debt from around 6% to 8% a year. These are indicative bands only, not a guaranteed quote, and the final terms depend on the site, the planning position and the exit.

The central risk is simple: consent is not guaranteed. An application can be refused, granted with onerous conditions, or approved for less than you hoped. Your plan has to survive that, not just assume success.

The main things to think through are:

• Refusal: if permission is declined, the hoped-for uplift does not arrive, so your exit must not rely solely on consent landing.
• Delay: planning routinely takes longer than expected, through committee cycles, consultation or appeal. Because interest rolls up, a longer term means a larger sum to redeem.
• Extensions: if the decision slips beyond your term, you may need to extend the facility, which carries cost and is not automatic.
• Conditions: a consent can come with conditions that affect value or timing, so the outcome may be less clean than a headline approval suggests.

None of this makes a pre-planning bridge wrong; it makes it a decision to take with open eyes. We help you stress-test the term length and the exit for a slower or worse outcome, so the finance still works if the planning process does not run to plan. Nothing here is financial, legal, planning or tax advice.

The quickest way to get a view is to share the planning picture and the numbers together, so we can gauge how a lender is likely to see the case.

Useful to send:

• The site address, its current use and current value or purchase price.
• The planning position: what has been or will be submitted, the consultants involved, and any feedback or appeal status.
• The timescale you expect to a decision.
• How much you want to raise and over what term.
• Your exit and, importantly, your fallback if consent is delayed or refused.

We will give an indicative view on leverage and pricing within the bands above, flag anything a lender is likely to query, then place the case with specialist lenders who take a view on planning value. We arrange the finance; we do not lend ourselves. These are indicative bands, not a guaranteed quote, and terms depend on the site, the planning position and the strength of the exit. Nothing here is financial, legal, planning or tax advice.