How planning gain bridging works
Land and buildings without consent are valued on their existing use, such as agricultural land, paddock or an empty commercial building, not on what might be built. The lender sizes the loan against that existing-use value or the purchase price, usually the lower of the two, and lends a smaller proportion than it would on a site with planning.
The borrower uses the term, commonly 12 to 24 months, to prepare and submit an application, respond to the planning authority and, if needed, appeal. When consent is granted, the site's value usually rises. The bridge is then repaid by selling the site with planning, or by moving onto development finance, which can often include a land advance sized against the consented value.
Interest is normally retained or rolled up, as the site produces no income. Some lenders that offer planning gain bridging also offer a follow-on development facility, which can simplify the next stage.
Evidence for the planning case
Lenders are taking a view on planning risk, so the quality of the evidence matters. They will usually want to understand why you expect consent and what happens if it is refused. Helpful material includes:
- The site's status in the local plan, or its inclusion in a land availability assessment
- Pre-application advice from the planning authority
- A planning consultant's report on the prospects and likely timescale
- Relevant nearby consents, appeal decisions and any known objections
- Initial reports on access, flood risk, ecology, heritage and drainage
A realistic programme is important. Determination can take longer than statutory timescales, and appeals can add many months. A term that allows for a refusal and appeal gives you more options than one that assumes approval at the first attempt.
Costs and risks to consider
Planning gain is a higher-risk use of bridging, and the costs reflect that. Alongside interest and arrangement fees, budget for planning application fees, consultants and survey reports, and the lender's valuation and legal costs. If consent is granted, a Section 106 agreement or Community Infrastructure Levy may apply, which affects the value of the site and the later development appraisal.
The main risk is that consent is refused, delayed or granted on terms that reduce the value. Lenders will want a fallback exit, such as selling at existing-use value, refinancing against the site or repaying from other assets. Additional security over other property is sometimes used where the site value alone does not support the loan.
Check the title for overage clauses, which can pass part of the planning uplift to a previous owner, and for covenants, easements or ransom strips that could limit what can be built.
Who planning gain bridging suits
Planning gain bridging suits developers, land promoters and investors who have identified a site with realistic planning potential and want to control it while consent is pursued. It is often used where a seller will not agree an option or conditional contract, or where buying outright gives a better price than a subject-to-planning deal.
It is less suited to speculative purchases with weak planning prospects, or to buyers who cannot fund the gap between the loan and the price, the planning costs and a fallback if consent is refused. An option or conditional contract may be a lower-risk alternative in some cases.
Illustrative example and how we compare lenders
As an illustration only: a commercial building is bought for £1,000,000 with potential for residential conversion. A lender lending around 60% of the purchase price would advance about £600,000 gross, with interest retained from that sum, so the buyer needs the balance and costs from their own funds. If consent is granted and the building is revalued with planning at a higher figure, a development facility could repay the bridge and fund the works.
Lenders differ on whether they consider land without planning at all, how much they lend, the evidence they need and whether they will fund the next stage. We compare those points alongside the rate and fees, and present the planning case so lenders can assess it properly. Instant Quotes gives indicative figures as a starting point, and final terms depend on each lender's valuation and checks.
