Land Bridging Loan

Secure a site and alleviate pressure during the planning stage with a land-bridging loan.

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Secure a Land Bridging Loan Fast Using Brickflow

As we all know, getting planning permission can be a long, drawn-out and delayed debacle – so much so that it deters many property developers. Having the right funding in place during the process can alleviate some of the pressure though – cue land bridging loans.

Also known as planning bridging or pre-construction finance, land bridging loans can provide you with working capital at the initial stages of your project. 

The fastest way to secure the best value bridging loan for land is by using Brickflow. It takes just a few easy steps:

  • SEARCH & COMPARE loans from 50+ lenders, instantly
  • RECEIVE a same-day DIP (our record is 7 minutes!)
  • APPLY directly from the platform with your advisor or a Brickflow partner

Our live market search opens up the breadth of the planning bridging market, enabling you to search and compare real-time loans from over 40 bridging lenders instantly. Once you’ve shortlisted your preferred lenders, you can have multiple DIPs back within the hour, allowing you to select the best T&Cs to suit your goals before applying directly from the platform. 

Benefits of using Brickflow to secure your land bridging loan include: 

  • Instant access to the current bridging market, enabling you to compare rates, fees, LTVs and more
  • Borrow up to £100 million
    Find out exactly how much you can borrow and at what cost
  • Filter out lenders who don’t match your criteria
  • Apply to multiple lenders with a single online application; if one lender says no, you can simply send the same application to another lender and avoid repetitive form-filling
  • Our lender-favoured digital application covers everything lenders need to know to make quick, reliable credit decisions – meaning quicker completion times

When you need a loan to buy land, Brickflow ensures you secure the right funding quickly so you won’t miss out on any opportunities.

How Brickflow works

The quickest & easiest way to search for land bridging loans

Compare loans from 50+ land bridging lenders

See how much you could borrow against a specific project & at what rate

Check detailed eligibility criteria to avoid wasting time & money

Ensure your deal stacks & make smarter investment decisions

What is a Land Bridging Loan and How Does It Work?

A land bridging loan is a short-term, secured loan, arranged on an interest only basis with flexible repayment terms and quick arrangement times, that can help fund land acquisition or refinance land.

Land bridging loans (also referred to as a planning bridge loan) do pretty much what they say on the tin – offer liquidity to purchase a site, obtain planning permission and finalise development details before moving onto the construction phase. 

They can also be used to refinance land to raise funds to cover the costs involved in the planning stage.

Land bridging loans would typically be used on sites:

  • Without planning
  • With only outline planning
  • With detailed planning that needs to be varied/enhanced in some way.
Key Features Key Information
Loan Term 1 - 24 months
Borrow £25,000 - £100 million
Rates 7% - 15%
Arrangement Time 3 days - 6 weeks
Uses Land with or without planning

 

Successful projects begin long before the first shovel goes into the ground - it starts with area research, piles of paperwork and form-filling, in-depth costings, and gathering a strong professional team. Using land-bridging finance throughout the initial stages ensures bills can be paid during the planning process and before the main source of development finance kicks in.

Uses of Land Bridging Loans?

Planning bridging loans are used for:

  • Purchasing land without planning permission, with outline planning or with planning that will be altered
  • Rapid acquisition of a site, such as buying at auction or for faster completion on prime sites
  • Refinancing land to raise capital
  • Funding planning application costs
  • ‘Land flipping’ - many investors don’t go on to develop the land, but simply secure planning permission, then sell a shovel-ready site to house builders or developers, and profit from the uplift in value.

Eligibility and Criteria for Land Bridging Loans

Specific eligibility criteria will differ depending on which lender you use, the type of land the loan is secured against and your plans for the land. But general criteria for land bridging loans is as follows:

 The Borrower
  • Age 18+ (some lenders have upper age limits)
  • UK resident or UK national living abroad (limited options for non-UK nationals)
  • Is an individual, Limited Company, LLP or partnership
  • Employed, self-employed, retired
Credit History
  • A good credit history isn’t necessary to secure a land bridge loan, but it can help bolster an application or secure better rates
Income 
  • Unless the loan is being serviced monthly, income is not normally a key barrier, but lenders will still ask for details
Uses
  • Land with or without planning
Loan Amount
  • £25,000 - £100m (lenders more likely to engage from £150,000+)
Loan Term
  • 1 month to 24 months, with most lenders offering 12-18 month terms
Loan to Value (LTV)
  • Typically limited to 50% LTV on land with no planning and 75% LTV on land with full planning (on a gross loan basis)
Security
  • Secured against the land; additional collateral may be used, typically a property or multiple properties

How Much Can I Borrow & How Long Will It Take To Secure a Land Bridging Loan?

At Brickflow, our lenders offer bridging finance from £25,000 - £100 million. Exactly how much you can borrow will depend on your project and other key metrics, such as:

  • Previous experience in achieving planning permission
  • Your proposed exit strategy
  • Your credit profile
  • The value of the security offered and your net asset worth

Typically, land without any planning will be limited to 50% LTV on a gross loan basis, whilst sites with outline planning can achieve as high as 75% LTV (gross). 

Like other types of bridging finance, a land bridge loan can be arranged quickly and far quicker than long-term mortgages or development finance. With desktop surveys, search indemnity and low leverage, a loan can be completed in as little as 3 days. 

In most circumstances though it will take between 7 and 14 days to complete a land bridging loan, and for more complex cases it can be up to 6 weeks.

If you need to secure a loan quickly, take a look at our fast bridging loan page to find out how Brickflow can help.

Associated Interest Rates, Costs and Fees

As well as the interest charges on bridging loans, there are other fees and costs involved. Here, we look at what you’ll typically have to pay with a land bridging loan.

  • Interest charges: The amount of interest charged is dependent on several factors, including the land, its location, planning status and desirability. Land with no planning permission poses more risk to lenders than sites with full planning, so rates tend to be higher; factors such as prime location, lapsed planning, inclusion in the local plan, or a strong alternative use can help reduce the risk.

    Your loan term, exit strategy, and you as a borrower, including your credit file, asset net worth and experience in obtaining planning permission will also affect the rate you can secure.

  • Valuation or survey fees: A surveyor will assess the land, with costs depending on the value, planning status and location. Lenders should provide quotes from more than one firm and let you decide – your broker or advisor should have some knowledge of each of the firms.

  • Legal fees: The lender’s legal fees, as well as your own

  • Broker fees: Normally paid by the lender. For example, where a lender charges a 2% arrangement fee, 1% is paid to the broker. Some lenders only charge a 1% arrangement fee and give no procurement fee to the broker, but it’s less common. In this case, the broker charges their own fees, typically 1% of the loan amount.

  • Arrangement fees: Up to 2% of the net or gross loan

  • Exit fees: Land bridging loans will rarely carry exit fees, although they do exist. Instead, some lenders might include a minimum loan term – between 1 & 6 months normally. 

Land with planning permission vs land without? Is there a better option?

Land with outline planning is generally considered less risky than land with no planning at all and prices can be similar to other bridging loans. (There are different levels of outline planning, for example when councils have a parcel of land available for development, usually when they are re-zoning, they often indicate what they want to be built but without any specifics. Or there’s what could be called ‘outline plus’ where a council has gone the extra mile and involved other stakeholders, such as highway agencies, and completed dedicated viability studies.)

Land without any planning at all presents a greater risk to lenders, and more risk means the lender will want to charge more.

For example, buying bare land and successfully achieving planning within a short time frame is much less straightforward than buying a built property that needs refurbishment; hence, a bridge loan for land without planning will cost more than a refurbishment bridge loan.

It also means that the number of lenders willing to offer planning/land bridging finance is greatly reduced. Less competition means less competitive pricing.

With so few lenders offering loans for land with no planning, the most likely way you will achieve a deal is if the land has recently been re-zoned by the council (i.e. forms part of a council’s  5-year master plan published by the local authority). 

Alternatively, use a planning consultant with a good reputation and proven history of planning on similar sites who can provide something in writing, supported by local evidence, explaining why planning is likely to be granted.

Application Tips for Land Loan Approval

Specialist finance loan applications typically don’t get approved because of:

  • A mis-match in criteria between what the borrower wants and what the lender can offer
  • Poor application presentations, lacking information.

Applying via Brickflow addresses both these problems, with up to 30 criteria filters and providing a digital application that covers everything lenders need to know. 

Here are some other tips that can help bolster your application:

Experience

  • Lenders prefer applicants with experience in acquiring sites and obtaining planning permission. A successful exit from a previous deal (sale after planning or site development) is reassuring for lenders
  • Working with a team of professionals, especially a good planning consultant, is crucial for securing finance
  • Using a broker/intermediary and a solicitor experienced in financing pre-planning purchases and land acquisitions can make the application process more efficient

Site Viability

  • Lenders need confidence in the borrower’s ability to achieve their vision
  • Present the site's history, any past or current planning applications, and your proposed project, including any development costs
  • Demonstrating thorough due diligence and showcasing your experience and that of your construction team will help prove the project's viability
  • Lenders need to understand the proposed work and see the potential for profit to mitigate their risk

Exiting the Loan

  • As mentioned, not all borrowers will go on to develop the site and exit the loan by selling
  • For anyone who does plan to develop the land, every lender will want to see a Decision in Principle (DIP) to demonstrate a potential development finance loan. This is because the bridge lender will want to ensure their own loan plus forecasted interest at the end of the term is covered by the Day 1 land loan of the prospective development loan. Where the bridge lender also offers development finance, they will run their own model to confirm the bridge loan can be bought out by their development finance.
  • Once you complete the planning process and have your site 'shovel-ready,' you can draw down development finance, repay the bridging loan, and start construction.

Land Loans on Brickflow

  • Before purchasing a site, check your finance options. Use Brickflow’s bridging loan comparison tool to assess the best borrowing options on the market.
  • Knowing your borrowing costs and desired profit helps determine the right price for the land, ensuring the deal is viable.
  • If you've found the perfect site, compare loans or contact the Brickflow Team to discuss pre-construction bridging finance.

Refinancing Options After Using a Land Bridging Loan

Once you have secured planning for your land, how you repay your bridging loan will depend on your plan for the site. 

  • Selling: If your end goal is to ‘flip’ bare land to a development-ready site then your land bridging loan will be repaid with the proceeds of the sale.
  • Development Finance: If you intend to build out the site, you will transition onto development finance.

Lenders offer land bridging finance because it puts them higher up the queue for future business; if they also offer development finance, then unless their rates and criteria is wildly uncompetitive, it’s highly likely borrowers will take both loans through that lender. Using a lender who provides both types of loans means that transitioning from planning bridging to development finance can be much slicker, and potentially cheaper (as you can avoid doubling up on legal and valuation costs).

Working with a specialist intermediary is the best way to secure the right funding for the entire cycle of your development project.

Benefits of Land Bridging Loan

Land bridging loans have the same key benefits as other bridging finance, such as:

  • Fast to arrange
  • Unregulated, so less bureaucracy
  • Can be used for both commercial or residential developments
  • Can meet the quick settlement requirements on auction purchases
  • No early repayment charges (after meeting a minimum loan term)

The most significant benefit though is the reduction in equity required for the overall project.  Whether you secure a 65% LTV or 75%, your capital requirements will be a smaller percentage of the site than owning outright. Less equity input equals better Return on Capital Employed (ROCE), which is a key driver for experienced property investors. 

Significant profits can be realised at the planning stage of a development project by securing planning permission for the site.  Using a pre-construction bridging loan is a smart way to minimise your capital input whilst maximising your return on investment. 

Land Bridging Loan Case Studies and Examples

To understand how a land bridging loan can significantly return on capital, we can look at two worked examples of the same scenario:

Scenario A

An investor purchases a site with outline planning without a land bridging loan

Site Purchase Price £900K
Purchase Cost £25k
Planning Cost  £50k
Total Costs £975k
Value after planning  £1.5m (6 months min)
Investor sells after planning is granted  
Investor equity contribution £975k
Profit £525k
ROCE £525k / £975k = 107.69% 
(annualised figure, based on 6-month project)

Scenario B

The same scenario, but the investor uses a land-bridging loan

Site Purchase Price £900K
Purchase Cost £25k
Planning Cost  £50k
Gross Loan £675k (75% of purchase price)
Net Loan £603k (c. 8% of the loan in interest and lender fees for 6 months borrowing)
Cost of Borrowing £72k
Total Costs £1.047m
Value after planning  £1.5m (6 months min)
Investor sells after planning is granted  
Investor equity contribution £444k
Profit £453k
ROCE

£453k / £444k = 204.05%

 

In scenario B, the investor has almost doubled their ROCE by using a bridge loan. Assuming the investor had the cash available to buy one site outright, then by securing a loan, they could actually purchase two similar projects at the same time, further increasing the returns on their initial investment.

Applying for planning can take months and carry huge costs. Currently planning permission fees for Outline Applications start at £578 per 0.1 hectare. For sites larger than 2.5 hectares there is a set fee of over £15,000 plus a further £186 per additional 0.1 hectare. Meaning a large residential site could potentially have outline planning application fees of over £200,000. Fees for Full Applications can be higher still. 

While most investors will have development finance in place to cover construction costs and provide a steady cash flow throughout the project, this won’t kick in until work starts; up until this point, all finance costs have to be met by the developer. 

Pre-construction loans release the burden of tying up unnecessary capital from the developer, meaning they can potentially run multiple projects simultaneously, and / or avoid paying out profit shares to investors based on planning uplifts. By not utilising all of your capital on one project and instead relying on land finance, investors can increase their returns, their flexibility and can react to changes in the market if needed.

Applying for a Land Bridging Loan Using Brickflow

To save money and time whilst also scaling your business sooner, apply for your land bridging loan though Brickflow.

Here’s how:

1. SEARCH & COMPARE live loans from 40+ bridging lenders, instantly

  • It takes just a few seconds to enter the details of your property.
  • Our market-wide, live bridging calculator searches loans from banks, non-banks and specialist lenders.
  • Direct comparison of details on loans currently available for your project, such as LTVs, interest rates, fees and more
  • Your search will be saved so you can log in later, modify your numbers and update your results

2. RECEIVE a same-day DIP (our record is 7 minutes)

  • Shortlist your preferred loans and with your debt advisor request a DIP from each lender.

3. APPLY directly from the platform with your broker or a Brickflow partner

  • Apply to multiple lenders with 1 x online application; if one lender says no, with one click you can simply send the same application to another lender, and avoid repetitive form-filling.
  • Our lender-favoured digital application covers everything lenders need to know to make quick, reliable credit decisions.
Testimonials

How borrowers, brokers & lenders get great results with Brickflow

"The benefit of Brickflow is instant information in a snapshot. You can see what various lenders are going to offer you, meaning you can move more quickly on deals and put an offer in."

"This is incredibly useful technology. Twelve months ago, we knew what lenders' pricing and appetite was - but today, in an ever changing market place, it's incredibly difficult to keep up."

“A comprehensive and clear information pack from Brickflow allowing for a full understanding of the proposition, allowing me to asses and provide robust Indicative Terms for the Client."

Ready to run your numbers through Brickflow?

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FAQs

Land Bridging Loan FAQs

Can you use a bridging loan to buy land?

Yes, a land bridging loan, also called planning bridging or pre-construction bridging loans are specifically tailored for land acquisition.

Does the land need to have Planning Permission?

No, some lenders will offer bridging finance on land without any planning. In comparison to other bridging finance types though, this market is relatively small as it is deemed more high-risk than other land or property purchases.

To secure a land bridging loan on land without planning, lenders will want to see your previous experience in successfully obtaining planning permission, and a quantifiable demonstration of why this particular piece of land has value and will likely achieve planning permission. Working with an experienced planning consultant can help you secure a land bridge loan on land without planning.

What loan-to-value can I achieve?

The maximum LTV you can achieve on land without planning is typically around 50%. For land with outline planning or full planning, you may be able to secure a land bridge loan of up to 75% LTV.

What is the maximum length of a land bridging loan?

Typically, the maximum term of a land bridging loan is 24 months, with most lenders offering 12-18 months terms.

What if the land has been previously used as an ex-garage/petrol station, for example?

Land bridging loans are typically used against a piece of land that has no buildings or structures on it, but they can also fund sites that have had previous use. For example, agricultural buildings, warehouses or storage, garages and petrol stations. 

These types of sites, often classed as brownfield, will usually involve remedial costs, such as decontamination, which can carry high costs. Petrol stations will have to undergo thorough testing due to potential contamination issues and it may be a number of years before the site can be built on. Likewise, agricultural sites come with a lot of restrictions that take hefty legal work to get around, which can also be time consuming. 

Since land bridging loans have short terms, some lenders will not be willing to lend on sites that have a long process to go through before they are ready to even begin the planning permission process.

However, working with a specialist debt advisor can help find ways to secure the right land bridging loan for your project and provide the working capital needed to make these initial stages a lot smoother.

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