Planning gain finance for land is a type of short-term loan used to fund a property transaction while planning gain is achieved. These loans are secured against property and are a type of bridging loan.
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.
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.
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 can lend to the following:
We offer loans from 1 month up to 24 months.
Previous adverse credit doesn’t usually cause a problem for us, however it may restrict your choice of lenders slightly.
We can arrange loans for borrowers who have previous defaults, CCJs, mortgage arrears, IVAs, bankruptcies and repossessions.
We offer facilities from £25,000 with no maximum loan size.
We can fund up to 80% of the current market value of the security property.
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.
The maximum LTV may vary depending on the type of security offered, e.g. Residential property, commercial property or land.
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 event of planning being successful – and if it isn’t.
Sites that have previous 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.
The interest rate charged will depend on what is currently on the site and the loan to value requested.
Yes, as part of the application process, you will also be charged a number of fees. The main ones are the following:
Lender arrangement fee – Lenders charge a fee for setting up the loan, usually 1-2% of the loan amount. This fee is usually due when the loan completes and can usually be added to the loan.
Lender exit fee – Some lenders charge an exit fee, which becomes due when the loan is repaid.
Broker fee – Many brokers charge a fee for their service, this is usually paid on completion, however some also charge upfront fees.
Valuation fee – This fee is paid to the lender to instruct a RICS surveyor to visit the property and complete a survey report on it.
Legal fees – You will be expected to cover both your own and the lenders legal costs, which is standard across bridging loan providers. These fees are generally paid late on in the application process, usually in 2 parts – the first when the solicitor begins their work and the balance on completion.
These loans are generally offered by bridging loan lenders, rather than the well-known high street banks.
These lenders may be banks themselves, but are usually lesser-known, specialist ones.
Most lenders are independent specialist bridging loan lenders, and each lender may be subject to a different level of regulation and offer different levels of protection to you, should anything go wrong.
