Small-site, conversion and permitted development finance

Permitted development finance funds a scheme that uses permitted development rights, such as converting offices or agricultural buildings into homes, without a full planning application. Most of these conversions still need prior approval from the council. Lenders treat them like other development or heavy refurbishment projects, releasing funds in stages as the conversion work progresses.

Permitted development rights are set by the Town and Country Planning (General Permitted Development) (England) Order 2015. Lenders check that prior approval has been granted and that the scheme meets its conditions before releasing build funds.

Small-site finance covers schemes such as a single new house, a pair of semis or a handful of flats. Lenders look at the site, the planning permission, the build costs and the expected sale values, in the same way as larger schemes. Some lenders specialise in smaller projects, while others set a minimum loan size that excludes them.

Site acquisition loans can fund the land purchase before the build loan starts. Home and house development loans for a borrower's own home are a different product, usually called self-build mortgages, and are regulated.

Conversion development finance funds turning an existing building into homes, such as a barn, office or shop. Demolish-and-rebuild finance funds clearing an existing building and building new homes on the plot. Both are assessed on the value after the work, the costs and the planning position, with funds released in stages after inspection by a monitoring surveyor.

Conversions can uncover structural issues once work starts, so lenders usually expect a contingency in the cost plan. Lighter works with no structural change may suit refurbishment lending instead, explained in the guide what is development finance.

Lenders look at how a scheme will be built. A main contractor on a fixed-price contract is usually seen as lowest risk. Labour-only build finance, where the developer buys materials and hires trades directly, needs more evidence of the developer's experience. Offsite manufacturing loans fund homes built in a factory, where payments often fall due before anything arrives on site.

Each route changes how and when funds are released. Lenders may want warranties, insurance and the contractor's track record before agreeing the drawdown schedule.

Costs include interest, usually rolled up, arrangement and exit fees, monitoring surveyor fees, valuation and legal fees. On small schemes, fixed costs such as monitoring and legal fees make up a larger share of the total, so comparing the full cost against the expected profit matters. Pricing reflects the site, the build route and the developer's experience.

Firms that arrange small-site and conversion lending can be compared on the development finance brokers page.