Financing permitted development projects

Matthew Dailly (pictured) is managing director at Tiger Financial

In May this year, the government changed its controversial permitted development rights to permanently allow certain home extensions as well as the conversion of shops to office space without the need to apply for planning permission. While developers welcome the simplicity of the scheme, campaigners have hit out at the policy for encouraging poor standards.

Affordable Housing

The debate arises from the fact that converted buildings do not need to conform to minimum size standards or include any affordable housing, unlike new developments.

In London, for example, the target is for a minimum of 35% of new housing to be affordable and some boroughs have even higher targets in their local plans. However, less than 1% of the permitted development homes built in London currently qualify as “affordable”.


Permitted development rights have been successful in increasing England’s housing stock and speeding up the planning process but have also resulted in the creation of flats and studios which are considerably smaller than the minimum size standards laid down for new build homes. It is thought that over half of permitted development homes in the London area do not meet the national size requirements, leading to concerns of overcrowding and cramped, unhealthy living conditions.

Developers, however, describe their conversions as “micro-homes” and with the extension of permitted development rights for the foreseeable future, and an unquenchable demand for housing, these conversions look set to continue, providing a healthy profit for developers who want a fast turnaround with minimal red tape.

Finance for permitted development

Because of the relative speed of many permitted development schemes, a specialist loan is likely to be most suitable in terms of flexibility and fast decisions. Look for short-term loans or those with no minimum term. A specialist property development loan broker is well placed to find exactly the right lender.

Build to Rent

Converting offices into residential properties can be appealing to developers in the Private Rental Sector (PRS) as often only interior renovations are required. In these cases a Build to Rent loan is needed and there are lenders who are very happy to fund this sector at a high loan to cost ratio.

If a developer wants to renovate a building and subsequently rent out the units, two loans may be required. One short term loan for the change of use and refurbishment and a different loan for the ongoing rental business.  A specialist broker can advise on the best provider for both loan types.

Office Development

Countering concerns that commercial space is being lost in the suburbs, the most recent change to the rules allows shops to be converted to offices. This may help provide convenient workspaces in local high streets, maintaining employment opportunities and keeping a vibrant, mixed-use environment.

Funding for commercial renovations is outside the normal scope of many lenders and requires a quick and practical short-term solution, tailored to the individual project.

Specialist Property Finance

At Tiger Financial we have considerable experience of working on permitted development projects. Using our large network of lenders and our in-depth knowledge of the sector we can find the right lender for each project; whether its converting from an office to apartments, from an agricultural building to a barn conversion, or a loft to another room, we can help.

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