Land finance
Land with planning
Written by Chris Canham, commercial finance broker with nearly 30 years in financial services. Last reviewed .
Funding a consented site before a spade goes in the ground, and holding it until the build facility starts.
What it is
Consented land is an asset. Unconsented land is a bet.
Lenders draw a sharp line between consented and unconsented land. Land with detailed planning consent has a defined scheme and a value a valuer can stand behind. Outline consent establishes the principle but leaves reserved matters to be approved. Land with hope value only is priced on the chance of a future consent – and very few lenders will fund it.
A consent is only as good as its conditions. Lenders and their solicitors will check whether pre-commencement conditions have been discharged, whether any Section 106 obligations or Community Infrastructure Levy affect the numbers, and whether the permission is still implementable before it lapses.
There are two ways to structure it. A land bridge funds the purchase now and is refinanced into a development facility once the build is ready to start. Alternatively, a single facility covers both the land and the build from day one. The first gives you flexibility; the second avoids paying two sets of fees.
Use cases
When land funding is needed.
Option or conditional contract completing
Consent has been granted and the contract must complete within a set window, whether or not the build team is ready.
Buying before the build team is ready
Securing the site while the contractor, warranty provider and build costs are finalised.
Discharging pre-commencement conditions
Holding the site while conditions are cleared and the development facility is arranged.
Outline consent only
Lower-leverage funding while reserved matters are pursued, with the value improving once detailed consent is in place.
Serviced plots
Infrastructure-first sites where roads and services are installed and plots are sold on to self-builders.
Strategic land
Where the exit is a sale to a housebuilder or developer rather than building the scheme yourself.
Indicative terms
How lenders approach land.
| Measure | Typical position |
|---|---|
| LTV — detailed planning | The strongest terms available for land |
| LTV — outline planning | Lower leverage than detailed consent |
| LTV — no planning | Very limited appetite, low leverage |
| Monthly interest rate | Priced as bridging, reflecting the strength of the consent |
| Term length | Short term, sized to the route to build or sale |
| Exit | Development facility, sale or refinance |
Lenders price the certainty of the consent, not the size of the site.
Go deeper
The stage before development finance.
A land facility is usually the first step before development finance. Once the conditions are cleared and the build is ready to start, the land loan is repaid by the development facility. Read our development finance guide and use the GDV calculator to model the whole scheme – land, build and exit – before you commit to the site.
Questions
The things people ask first.
Site agreed and consent granted?
Send the planning reference, the purchase price and your intended build start date, and you will get an indicative structure back.
We aim to respond the same working day.
Or book a 30-minute call at a time that suits you.