UK Property Finance has again been at the forefront of one of the latest trends that require bridging finance instead of more traditional forms of finance to enable it to occur. The speculative trend of purchasing land without planning permission and then as quickly as possible obtaining planning permission to greatly uplift the valuation, therefore enabling the land to either be sold at a substantial profit or built out using property development finance, has seen huge growth over recent years.
Bridingloans.co.uk has had two recent cases that highlight this scenario, each of which has had entirely different outcomes:
- 1) A client wanted to purchase land without planning in Liverpool for £40,000. He had experience making similar purchases throughout the country and obtaining planning permission. This happened with this investment, and he quickly and subsequently increased the valuation fourfold, allowing the possibility of standard development finance to be obtained. At this stage, the client wanted to further increase the valuation of his investment asset by building out the properties mentioned within the planning permission, and as such, we raised the finance needed for him to complete four flats, which were sold for a large and substantial profit.
- 2) Our second client already owned a relatively low-value, unencumbered plot of land valued at £100,000. The site was close to other land that had recently been granted planning, and our client wanted to do the same and increase the value of his land. His problem, however, was that he had used all of his own available funds to purchase the land, and he also did not have the required expertise to enable him to obtain planning by himself. We raised sufficient funds to allow the client to recruit the services of suitably skilled individuals who obtained planning permission, and the land was now worth over £400,000. As our client had neither the skills to build out the properties nor the inclination to do this, he followed his initial intention, which was to sell the land once the valuation had increased with the planning. He did this with ease and made a life-changing profit on his investment.
As both cases initially started with the need to raise funds on land without planning permission, the number of lenders available for this was virtually non-existent. We, however, have very close relationships with flexible lenders dealing with the full range of products required in the UK market. As the rates we obtained were similar to those available from many bridging loan lenders on standard bridging cases, both clients managed to obtain market rates for their projects, and completion occurred in less than 2 weeks from inception. One of the clients even had previous credit issues, which we managed to get accepted.