Land bridging is a short-term loan used to buy a site, with or without planning consent, before a development facility is put in place.
Land is the hardest security a lender takes. It produces no income, it is slow to sell, and until consent is granted its value hangs on a planning decision nobody controls. That is why loan to value sits lower here than on any other bridging product, and why the exit gets more attention than the site itself.
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With planning and without
Every land lending decision starts here. A site with detailed consent has a defined value and a defined route into development. A site without one is a bet on a planning committee.
| Status | What it means | Lending position |
|---|---|---|
| Detailed or full planning permission | Consent granted for a specific scheme, drawings approved | The strongest position. Widest lender choice and the highest advance against value |
| Outline planning permission | Principle of development accepted, reserved matters still to be approved | Fundable, on more conservative terms. Lenders will read the conditions carefully |
| Permitted development or prior approval | Change of use or works allowed without full permission | Treated close to consented land where the prior approval is in place and in date |
| No planning, allocated in the local plan | Identified for development in policy, no application determined | Specialist lenders only, low advance, exit scrutinised heavily |
| Raw land with no consent or allocation | Agricultural, amenity or strategic land | Hardest to fund. Value is current use value, not hope value |
Lenders value current use, not hope value
The most common disappointment on land bridging is the borrower valuing the site at what it will be worth once consent lands, and the lender valuing it at what it is worth today. The uplift belongs to you, not to the loan. Budget on the current use figure and treat any consent-driven uplift as profit rather than as borrowing capacity.
How much you can borrow against land
Advances on land sit well below the levels available on a standing building, and they step down as planning certainty falls away. In broad terms:
- Land with detailed consent attracts the highest advance, because the value is evidenced and a development lender can take out the bridge.
- Land with outline consent sits a step below, and the lender will want to see the conditions that remain to be discharged.
- Land without consent is lent against current use value at a conservative percentage, and several lenders will not go there at all.
- Additional security changes the picture entirely. A charge over another property with equity in it is the most common way to raise the effective advance on a land purchase.
Work out what the site is actually worth before you offer on it. The residual land value calculator works backwards from gross development value, build costs, finance and profit to the figure the land can support.
The planning gain strategy
Buying a site without consent, obtaining it, and then either selling or building is one of the highest-margin plays in property. It is also the one lenders question hardest, because the whole strategy turns on an outcome that is not in your control.
- Establish the planning case firstPre application advice, a planning consultant’s written opinion, the local plan position and any recent approvals on comparable sites nearby. This is what a lender reads.
- Price the land on today’s valueNot on what it will be worth with consent. Your bid and your borrowing both need to work on the current figure.
- Set a term that covers the determination periodThen add contingency. Planning routinely runs longer than the statutory target, and a bridge that expires mid determination is an expensive problem.
- Have a fallback exitWhat repays the loan if consent is refused. Sale of the raw site, an appeal with a funded timetable, or a charge over other assets. A lender will ask, and “we will get consent” is not an answer.
- Move onto development finance or sellWith consent granted, the site is worth more and a development lender can take out the bridge, or the land can be sold on with the uplift crystallised.
Options and conditional contracts
Where the planning risk is too large to take on a straight purchase, the usual structures are an option agreement or a conditional contract. You secure the right to buy the land and only complete once consent is granted, which moves the risk off your balance sheet during the planning period.
Finance still has a role. The option fee, the promotion costs and the professional fees through the planning process all need funding, and where the applicant has other property, that is often raised against existing assets rather than against the site itself. Once consent is granted and the option is exercised, land bridging or development finance funds the completion.
Serviced and unserviced land
A serviced site has mains water, drainage, electricity and access already in place or readily connectable. An unserviced site does not, and the cost of putting services in can be substantial enough to change whether a scheme stacks up at all.
- Get quotations for connections before you commit, not after. Utility connection costs vary enormously by site.
- Check access and ownership of any road or track serving the site, including rights of way and ransom strips.
- Drainage is the frequent killer. Where there is no mains connection, the cost and consent position for a private system needs establishing early.
- Contamination on former industrial land triggers survey and remediation costs that a valuer will reflect.
Moving onto development finance
For most investors the land bridge is a stepping stone rather than the destination. The handover to a development facility is where timetables go wrong, so plan it at the outset rather than at the end.
- Talk to the development lender before the bridge completes. Some will fund the land purchase and the build under one facility, which removes a whole set of costs.
- Understand how land cost is treated. A development facility is sized against total project cost and against gross development value, and how much of your land cost the lender recognises affects how much cash you need in the deal.
- Have the build package ready. Costed schedule, programme, contractor, professional team. A development lender cannot issue terms without it, and every week of delay is another month of bridging interest.
- Discharge the planning conditions. Pre commencement conditions left outstanding will hold up the first drawdown.
Our property development finance page covers the facility that follows, and the drawdown calculator models how the money is released across the build.
What lenders look at
- Planning status and the paperwork behind it. Decision notice, conditions, expiry dates, any section 106 obligations and the community infrastructure levy position.
- Title and access. Clean title, a proper access right, no ransom strip, no unresolved boundary issue.
- Site constraints. Flood zone, contamination, protected trees, listed status or conservation area, ecology and protected species.
- The exit, in writing. Development finance from a named lender, a sale with a marketing plan, or a refinance. This is decisive on land more than on any other security.
- Your track record. On a consented site with a straightforward exit, less important. On a speculative planning play, considerably more so.
Land bridging FAQs
Can I get a bridging loan on land without planning permission?
Yes, from specialist lenders, but on conservative terms. The advance is measured against the current use value of the land rather than what it would be worth with consent, and the lender will focus hard on how the loan is repaid if permission is refused. Adding a charge over another property with equity in it is the most common way to make these cases work.
How long should I take the loan for?
Long enough to cover the whole planning determination period plus contingency, and then the handover to a development facility or a sale. Planning routinely takes longer than the statutory target, particularly where a section 106 agreement is being negotiated. Running out of term mid determination forces you into an extension at the worst possible moment.
Will a lender value the land at what it is worth with consent?
No. Valuation is on the basis of the site as it stands today, in its current planning status. Any uplift from a future consent is your profit, not extra borrowing capacity. Price your bid and your funding on the current figure.
Can one facility cover the land purchase and the build?
On a consented site, often yes. Several development lenders will fund the site acquisition and the construction under a single facility, which avoids a second set of valuation and legal costs and removes the handover risk entirely. It depends on the site having detailed consent and a costed build package ready at the point of application.
What is a ransom strip and why does it matter?
A narrow piece of land in separate ownership sitting between your site and the public highway, which means you cannot access your own site without acquiring a right over it. It can stall a development entirely and it will stop a lender proceeding. Your solicitor should identify it at title investigation, which is a reason to start legal work early rather than after terms are agreed.
Is land bridging regulated?
Land purchased for development, investment or business use is non-regulated, which is the work we arrange. A loan secured on land forming part of a property you or an immediate family member occupy would be a different matter and falls outside what we handle. We are not authorised or regulated by the Financial Conduct Authority.
Fund your site acquisition
Found a site? Tell us the planning position.
Send us the location, the price, the planning status and what you intend to build. We will tell you what is achievable against the land, which lenders will look at it, and whether a single facility covering land and build is the better route.
Related pages
- Property development finance
- Development exit finance
- Auction finance
- Development finance for first time developers
Bolton Business Finance Ltd is not authorised or regulated by the Financial Conduct Authority. We arrange non-regulated, business purpose commercial finance only. Any property or land used as security is at risk if the loan is not repaid.