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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.

To take a look at the way in which bridging loans are used to create profit in the field of property development, we spoke with James Stevenson, who has 20 years of experience, about some first-hand experience about what is involved in the conversion process that earns the development company profit.

This is what James had to say. Over the years, we have worked on many refurbishment projects, but one of the most memorable ones we worked on was the classic “barn conversion” in 2005 in Brighton. This was one of the most interesting projects we worked on due to the fact that we literally started with what can be explained as a blank sheet.

When we first got to the site, the wall was weak and could react to gentle pressure. The cement was very old and unstable. Our immediate reaction was to look up (in case the roof fell in), and we prepared ourselves to get out of the way just in case it did. What a job it was! However, it turned out we really enjoyed it in the end (as did the client who funded the whole conversion), for the following reasons:

The conversion process

For argument’s sake, we sorted out the architect’s plans and got all the planning permissions through before we engaged in the transformation of this old backstreet relic into the top-class luxury home we envisioned. After the planning was in place, we presented the appropriate information to the client and got the go-ahead to begin.

It is pertinent to note that the client was funding the whole process, so of course he had to know what the budget was and the time period we were aiming for, as well as the shortfall short fall of the programme time limits. In every scenario, we had a failsafe curtain that involved contingency plans around every corner. Thus, if there was an issue that held up the projected plan, it would be addressed financially.

There is a document, but it can be commonly known as a notary agreement where both parties understand and confirm that these are the parameters of the agreement that they will adhere to, and if such a shortfall occurs, there will be a financial clause that comes into effect.

Steps in the design process

First days on the job and planning are the keys to organising the first steps. When the overall concept is conceived, the building begins. We took the soil floor and laid the concrete screed into position, levelling the base for the build.

Next was screeding the floor, which set the level for the first-floor height. Measuring from the floor, we set the joist hanger positions correctly using “Chemfix bolts into the walls” to secure the first-floor infrastructure into place.
(Source: wikihow.com/Screed-a-Floor)

Joist hangers were put into place so that the first floor could be constructed, ready to build from. Then the stairs were put in, and the boarding was installed, forming the upper section of the property.

Once this was laid out, separate compartments were put into place in the bedrooms, bathroom, hallway, and so on. As the lower section of the ceiling was not yet boarded, the electricity and pipe work were installed so all the associated could then be connected up in situ.

Planning is everything on a job like this. Overboarding downstairs was completed together with plastering, ready to decorate later. Next was the installation of the stairway into position so the upper floor boarding could begin.

Know what you want to do

Pipework needed to be laid into place, along with the inflow and outflow of soil pipes needed for the fitting of both kitchens and bathrooms together.

Plans and designs understood that layouts were essential, so all the trades knew exactly what the outcome required was and how to implement the jobs at hand. Managing the trades (for a foreman or site manager) is seriously essential work, as any mistake costs money. If things are managed correctly in the first place, then the rest should fall into place on time and, above all, on budget.

Forward planning

Once you have a grasp on the requirements, materials are ordered as required in the correct order. There is little point in bringing in the trades or professions when they do not have the base materials to work with, and again, planning is the key to all of this. Everything must be pre-organised and ready on site to get on with the job, ready to start the process from the start. Time is money, and planning is the key to everything.

The upper floor layout was positioned with bedrooms, toilets, bathrooms, etc. all put into place and fitted as per the specifications detailed on the plans. The client was overseeing all the steps involved, so if there were any issues, they were picked up ASAP and dealt with accordingly.

Funding and confidence

All the funds were in place, ready to go ahead, so now it is of the essence to keep to the schedule. A bridging loan had been raised to complete work, so we were on track for completion within the two-month period set to complete the entire project.

As Nick Marr Property Development Expert points out, “With any barn conversion or conservatory design, it is important to get everything right from the start, so the job runs smoothly and will be completed in the specified time frame, first time, which obviously eliminates costly mistakes and delays overall.”

Conclusion

The above is a brief outline of the steps involved and the mental set of actions needed to get a very basic grip on such a project from the outset.

We hope this write-up was of help to you in the learning or other processes. Property development is a thorough and exacting process. You need to know what you are trying to do and how you set about doing it, from the smallest consideration to the end result. If you have put into play financial backing, then it is vital that you finish the project on time; otherwise, you risk the penalty clause agreed to when taking out the loan.

Our client was looking to borrow against an inherited property to repay an existing bridging loan secured on his own property which was arranged to consolidate debt.

The repayment strategy for the initial 12-month bridging loan had failed as the estate agents were unable to sell the property in the intended timeframe, hence the need to repay this loan as it had come to the end of its term and the current lender was needing repayment. Our client also wanted to raise additional funds to pay for medical costs and to repay money owed to family members which had accumulated during the term of the current loan, following a bereavement.

Finance raised on an inherited property

The inherited property was unencumbered and had to be transferred into our clients name as part of the transaction. UK Property Finance were able to arrange a new loan for our client whilst we used our vast industry contacts to keep in constant communication with their existing lender and solicitors to ensure they remained abreast of the situation and knew the client was doing their utmost to arrange repayment of the loan.

On agreement of the new loan the solicitor provided an undertaking to the lenders solicitors confirming that when the new loan was advanced, the inheritance duty was paid and our clients interest became listed on the property deeds as owner. The clients’ solicitor also confirmed that they would ensure the remaining advance was used to repay the existing bridging loan secured on our clients current property and the medical bills accrued.

The exit or repayment of the new bridging loan was still via sale and due to the extended timeframe agreed our client was able to sell his property without further stress and once the sale was complete our client took up residence in the inherited property which was now owned free of any loans.

Buying land for the first time can be a daunting and challenging process. Even if you’re more than familiar with traditional property procurement, buying land is an entirely different experience. From deciding where to buy land in the first place to finding the perfect land loan for your needs, there’s much to take into account along the way.

As for the ‘best’ way to buy land, the short answer is simple – as strategically as possible. In terms of where you buy the land, why you’re buying it and your chosen land financing option, it’s entirely up to you. But there are nonetheless some universal pointers to consider, which could help you make the right decision.

Examples of which include the following:

• Your main reason for buying the land

You could be looking to buy a plot of land to sell at a later date for a profit.  Alternatively, you could be considering building your dream home, or even an estate of properties to rent or sell. Your ultimate intentions for the land should be factored into every decision you make from start to finish.

• The different types of land available

The type of land you buy will determine if and to what extent you can do anything useful with it. So rather than just buying a plot you liked the look of in a high-demand area, it’s worth first considering its usefulness and versatility or otherwise.

• Funding solutions

Addressing the issue of how to finance land investments, there are myriad options to explore. From specialist land loans to development finance to bridging loans to agricultural loans, it depends on your current financial circumstances and intentions for the land.

• Compare the market

How much is agricultural land per acre to buy? How long is a piece of string! The answer will vary significantly from one area to the next, in accordance with both demand and the capacity for the land to generate healthy returns. Hence, it can be useful to compare the market and consider a variety of locations where possible.

• Consider planning permission requirements

Assuming you plan on developing the land you purchase in some way or another, it’s worth factoring in any planning permission requirements you may need. Depending on the type of land you purchase, it could be easy, difficult or impossible to receive formal permission to develop or build on it. Always better to find out before you go ahead and commit to the purchase.

• Organise a reliable survey

As with any property you intend to purchase, it’s important to have the land meticulously and professionally inspected from top to bottom. From flood risks to boundaries to potential hazards of all shapes and sizes, it’s impossible to evaluate the value and potential of a plot of land with a fleeting glance.

• Focus on future demand

Rather than considering what the plot of land is worth today, think carefully about its ongoing growth potential. For example, if the area is scheduled to benefit from improved public transport links or the development of an industrial park in the near future, this could have a marked impact on the value of your investment.

• Secure professional representation

Last but not least, it always pays to have the experts on your side when considering an important investment. So rather than going it alone, secure professional representation from the earliest possible stage from a reputable independent specialist. Even if you know what you’re doing, an additional objective viewpoint could prove invaluable.

Historic properties hold a unique charm, offering glimpses into the past and preserving architectural treasures for future generations. However, restoring and refurbishing these properties often comes with significant financial challenges. From structural repairs to conservation efforts, the costs associated with refurbishing historic buildings can be substantial. Fortunately, refurbishment finance, including bridging loans, provides a viable solution for property owners looking to preserve heritage while navigating the complexities of funding.

Preserving heritage through refurbishment finance

Historic properties play a crucial role in maintaining cultural heritage and architectural diversity. Whether it’s a centuries-old castle, a Victorian-era mansion, or a quaint cottage with historical significance, these properties contribute to the fabric of our communities. However, the upkeep and restoration of such properties require careful attention and substantial investment.

Refurbishment finance serves as a lifeline for property owners seeking to undertake restoration projects. These financing options offer flexibility and tailored solutions to address the unique needs of historic property refurbishments. Bridging loans, in particular, play a pivotal role in providing short-term funding to cover the initial costs of refurbishment while longer-term financing is arranged.

Bridging loans: A key component of refurbishment finance

Bridging loans are well-suited for historic property refurbishments due to their speed and flexibility. These short-term loans can be secured quickly, allowing property owners to commence refurbishment work without delay. Whether it’s repairing structural damage, restoring period features, or enhancing energy efficiency, bridging loans provide the necessary funds to kick-start renovation projects.

One of the advantages of bridging loans is their versatility. They can be used to finance various aspects of refurbishment, including purchasing the property, covering renovation costs, or bridging the gap between selling an existing property and acquiring a historic one. This flexibility enables property owners to adapt to evolving project requirements and unforeseen challenges that may arise during the refurbishment process.

Moreover, bridging loans are typically secured against the property itself, providing lenders with added assurance and enabling borrowers to access higher loan amounts based on the property’s value. This makes bridging loans an attractive option for financing refurbishment projects, especially for owners of historic properties with significant equity.

Navigating the refurbishment process

While refurbishment finance, including bridging loans, provides an essential financial tool for preserving historic properties, navigating the refurbishment process requires careful planning and consideration. Property owners should conduct thorough assessments of the property’s condition, obtain necessary permits and approvals from local authorities, and engage qualified professionals with experience in historic preservation.

Additionally, it’s essential to develop a detailed budget and timeline for the refurbishment project, taking into account potential contingencies and unforeseen expenses. By working closely with lenders, contractors, and preservation experts, property owners can ensure that their refurbishment endeavours are executed smoothly and in accordance with preservation standards.

Conclusion:

Refurbishing historic properties is not only a labour of love but also a commitment to preserving cultural heritage for future generations. With refurbishment finance, including bridging loans, property owners can embark on restoration projects with confidence, knowing that they have the necessary funding to safeguard our architectural treasures.

By leveraging the flexibility and speed of bridging loans, property owners can breathe new life into historic properties, revitalising communities and honouring the legacy of the past. As stewards of our built heritage, let us embrace the opportunity to preserve and cherish historic properties, ensuring that their beauty and significance endure for generations to come.

Having been rejected for a mortgage, our client was now looking for a bridging loan to buy a new residential property before his current one sold. The loan was to be secured on the purchase property only, as it was of enough value to borrow the loan required and because the client’s current first charge lender would not allow a second charge consent on the current residential. The rest of the purchase price was made up of savings.

UK Property Finance has access to all the main premium rate lenders in the market, which also allows us access to many special rates starting at below 0.4%.

“This was no ordinary house”

The client was looking to exit the loan by mortgaging his purchase property. However, the finance was not available at this stage due to the client’s lack of the first full year’s accounts from his new business venture. The mortgage had been declined, leaving him short of time to complete the purchase of his desired property. This was no ordinary house, as was soon revealed; it was once owned by the client’s parents and was where he had spent much of his childhood. The considerable sentimental value to our client spurred the team to find a resolution.

“The dream team quickly assembled into action”

Indeed, due to the time taken before contacting UK Property Finance, the vendor had now threatened to pull out of the sale if completion did not occur within one week. We were told of the urgency during our very first contact with the client and following an initial fact-finding process.

The dream team quickly assembled into action and instantly provided a quotation for the client’s requirements. The client wanted to proceed, so within 2 hours we had obtained an agreement in principle at the most competitive rate in the market. UK Property Finance also negotiated with the lender to allow an automated valuation, which would make the process much quicker. The team immediately created the finance pack and uploaded it to the document collection company, which met the client at 8 p.m. that evening, by upgrading to a premium service. By the time we opened for business at 8 a.m. the next morning, the finance pack had already been scanned and emailed back, so it could be rapidly submitted to the lender.

By liaising closely with the lender, who lost no time in completing the underwriting and automated valuation, this enabled an offer to be received on the same day of submission. The offer also went to the lenders and the client’s solicitors, who had been warned about the urgency of the case. Even with some minor delays, UK Property Finance continually chased this regulated bridging loan to complete within a week of initial client contact. Continued support for our client meant UK Property Finance could arrange a mortgage for the client to repay his bridging loan within 3 months of funding.

UK Property Finance is not just a bridging loan specialist and can offer many different lending solutions. To find out how we can support you, please contact us at 0116 402 7982.

As we move into 2025, the bridging finance market is gaining momentum, fuelled by shifting economic conditions, evolving borrower needs, and regulatory developments. Despite the challenges of the past few years, bridging finance has shown remarkable resilience and adaptability, making it a vital component of the UK property and lending landscape. Here’s why the future of bridging finance looks promising and what trends are shaping the sector.

Resilience amid economic challenges

The broader financial market has faced turbulence, with rising interest rates and inflation impacting borrowing behaviour. Yet, bridging finance continues to thrive due to its ability to provide swift and flexible solutions for property transactions. Whether it’s helping homeowners overcome chain breaks or enabling investors to fund time-sensitive projects, the industry is demonstrating its value as a reliable short-term funding option.

A rising demand for tailored solutions

One of the primary drivers behind the growth of bridging finance is the increasing demand for customised solutions. Borrowers, including property developers, landlords, and homeowners, are turning to bridging lenders for creative financial packages that address specific challenges. For instance:

• Chain breaks: Homeowners use bridging loans to secure their next property without waiting for their current one to sell.
• Auction purchases: Investors leverage bridging finance to meet tight deadlines for property purchases at auctions.
• Property upgrades: With new energy performance regulations on the horizon, landlords are using bridging loans to fund property developments and ensure their properties meet EPC requirements.

This growing reliance on bespoke funding solutions highlights the importance of flexibility and speed in today’s lending market.

A boon for professional investors

The bridging industry is particularly attractive to professional investors focused on capitalising on opportunities in the property market. Regions such as the Midlands and the North, where property prices remain competitive, have seen increased activity. Investors are resorting to bridging loans for various purposes.

• Houses in multiple occupation (HMOs): Quick acquisition and refurbishment of properties to meet demand for affordable rental housing.
• Commercial-to-residential conversions: Bridging loans provide the capital needed to transform commercial spaces into residential units in response to housing shortages.

Bridging finance will continue to be a crucial tool for professional investors as interest in value-add projects grows.

Adapting to regulatory shifts

Regulatory changes, particularly those related to energy efficiency and housing standards, are shaping the bridging finance market. The government’s push for greener homes is prompting landlords to invest in energy-efficient upgrades. Bridging loans are providing the necessary funding to ensure compliance with regulations, demonstrating the sector’s adaptability to evolving market demands.

Interest rate dynamics

While higher interest rates have challenged traditional fixed-term mortgage products, they’ve created opportunities for the bridging market. Borrowers seeking short-term flexibility and quick access to capital are turning to bridging loans as an alternative. As the Bank of England signals potential rate reductions later in 2025, the market could see further expansion as affordability improves.

Evolving borrower demographics

The profile of bridging loan borrowers is expanding. Beyond professional investors and developers, a growing number of private individuals, downsizers, and auction buyers are incorporating bridging finance into their property strategies. This diversification reflects the sector’s ability to meet the needs of a broad spectrum of borrowers.

Looking ahead: 2025 and beyond

The bridging finance market is well-positioned for growth in 2025. Its core attributes; speed, flexibility, and adaptability, make it indispensable in a dynamic property market. As regulatory frameworks evolve and borrower demands shift, bridging lenders who embrace innovation and customer-centric approaches will lead the way.

For borrowers and investors alike, staying informed about the latest trends in bridging finance will be key to unlocking opportunities in 2025. Whether you’re looking to secure your next property, fund a refurbishment project, or navigate regulatory challenges, bridging finance offers the tools needed to thrive in a changing landscape.

Bridging finance has proven its ability to weather economic uncertainty and deliver solutions that work. The sector, armed with a solid foundation and a forward-thinking approach, is poised to thrive in the upcoming year, providing ample opportunities for optimism and growth.

Asset-based bridging loans are short-term financing solutions designed to bridge the gap between the immediate need for funds and the longer-term financing or sale of an asset. Individuals and businesses seeking to unlock capital quickly find them attractive due to the flexibility of bridging loans. This blog post will explain these loans, how they work, and everything else you need to know before applying.

What are asset-based bridging loans?

Asset-based bridging loans are loans secured against high-value assets such as property or land. The loan amount is typically based on the value of the underlying asset, which serves as a security. These loans are commonly used for short-term needs, such as covering a financial shortfall, completing property transactions, or seizing investment opportunities.

Unlike traditional loans, such as mortgages, bridging finance is designed to be temporary. Borrowers are expected to repay the loan within a relatively short time frame, usually between 6 and 12 months, either through refinancing, asset sales, or other financial arrangements.

Key features of asset-based bridging loans

1. Speed of funding: Bridging loans are known for their quick approval and funding process, often completed within a couple of weeks, sometimes as quickly as a few working days.
2. Flexible usage: These loans can be used for a variety of purposes, including property purchases, business investments, or urgent debt repayment.
3. High loan-to-value (LTV) Ratios: Some lenders offer up to 75% of the asset’s value as the loan amount.
4. Short-term duration: Designed to bridge a temporary gap, these loans typically require repayment within the term which is typically up to 12 months.
5. Interest rates: Bridging loan rates are generally higher than traditional loans and can vary depending on the lender and the risk involved.

What are the uses of asset-based bridging loans?

1. Property transactions:
   • Chain breaks: When a property chain collapses, a bridging loan can help secure the purchase while waiting for the sale of another property.
   • Auction purchases: These loans provide quick funds to meet tight deadlines often associated with property auctions.
2. Business funding:
   • Businesses can use bridging loans to address cash flow issues, purchase equipment, or fund expansion projects.
3. Debt consolidation:
   • Borrowers can consolidate high-interest debts using a bridging loan, often reducing overall financial strain.
4. Renovation and development:
   • Developers and investors use these loans to finance refurbishment projects, adding value to a property before selling or refinancing.
5. Asset acquisition:
   • Borrowers can seize time-sensitive opportunities, such as purchasing undervalued assets, by using a bridging loan.

Pros and cons of asset-based bridging loans

Pros:

• Quick access to funds: Ideal for time-sensitive situations.
• Flexible terms: Many lenders offer tailored repayment schedules.
• Broad applications: They can serve both personal and business needs.
• No need for perfect credit: Approval is primarily based on the value of the security.

Cons:

• Higher interest rates: Typically more expensive than conventional loans.
• Short repayment period: Borrowers must have a clear exit strategy.
• Risk of repossession: Failure to repay can result in losing the secured asset.

What should I consider before applying?

1. Loan purpose: Ensure that the loan is necessary and aligns with your financial goals.
2. Exit strategy: Have a solid plan for repaying the loan, whether through refinancing, asset sales, or other means.
3. Costs: Understand all associated costs, including interest rates, fees, and penalties for early or late repayment.

How to apply for an asset-based bridging loan

1. Identify a suitable lender: research brokers and lenders who specialise in asset-based bridging loans.
2. Prepare documentation: Typically, you’ll need proof of asset ownership, ID and a clear repayment plan. All lenders will have individual requirements.
3. Application process: Submit your application and wait for approval. Many lenders offer preapproval within 24–48 hours.
4. Receive funds: Once approved, funds can be disbursed in as little as a few days.

Is an asset-based bridging loan right for you?

Asset-based bridging loans are ideal for those who need fast, short-term financing and have valuable assets to use as security. They are not suited for long-term financial needs or those without a clear repayment strategy.

Final thoughts

Asset-based bridging loans are a powerful financial tool, offering quick access to capital for those who need it most. However, they require careful planning and a clear understanding of the risks involved. By evaluating your needs, the value of your assets, and your repayment strategy, you can determine whether this type of financing is the right solution for you.