Pre-Planning Bridging Loans - Land & Site Acquisition Finance

A pre-planning bridging loan is short-term, land-secured finance used to acquire a site before planning permission is in place. Unlike standard bridging, the security carries planning risk - the lender values the land on its existing use value (EUV) rather than its consented or hope value. Pre-planning bridging is used by developers and land promoters to secure sites quickly while the planning application cycle runs, exiting onto development finance once consent is granted.

Lenders value land for pre-planning bridging on its existing use value (EUV) - what the land is worth in its current planning state, not what it might be worth with hoped-for planning. A 2-acre paddock with no planning is valued as agricultural land; an industrial site with no residential consent is valued as industrial. The lender may credit a small uplift where the local plan allocates the site for the intended use or where similar consented schemes nearby demonstrate planning achievability.

50-65% of EUV is the typical range, with the higher end available where the site benefits from strong planning indicators - positive LPA pre-application feedback, local plan allocation, or proximity to recently consented similar schemes. The lower end applies to speculative or contested-planning sites. LTV is calculated against EUV, not against the purchase price, so a buyer paying above EUV for planning potential will need to bridge the gap with additional equity.

Pre-planning lenders typically require: a planning consultant's appraisal of consent probability; evidence of pre-application engagement with the LPA (or rationale for not having engaged); local plan extracts showing allocation or supportive policy; comparable consented schemes; environmental and constraint screening; and the borrower's planning track record. The stronger and more complete the planning case, the higher the LTV and the better the rate.

Yes, but the lender pool narrows and pricing reflects the additional risk. Sites with no planning history are typically funded at 50-55% of EUV with rates at the upper end of the 0.75-1.10% pm range. Borrowers strengthen these cases by commissioning a planning consultant's positive opinion before approaching lenders, demonstrating that the planning case has been properly tested. Sites in policy-supported locations (local plan allocations, urban regeneration areas) are easier to fund than greenfield speculative.

The loan continues to be secured against the EUV of the land, so the lender's position is not catastrophically affected. The borrower's options are: (1) appeal the planning refusal to the Planning Inspectorate (typically 6-12 months to determine); (2) submit a revised application addressing the refusal reasons; (3) sell the site at EUV to a different end-user; (4) refinance the bridge onto a land-secured facility (limited options). Doulton always models the downside case at underwriting and structures the facility term with contingency for this scenario.

The dominant exit is grant of planning consent followed by refinance onto a development finance facility, which redeems the bridge and funds construction. A common alternative is sale of the consented site to a developer at the uplifted post-consent value - this is the standard 'land promotion' model. Less common exits include refinance onto a long-term land-secured loan (for amenity, agricultural or development holding purposes) or buy-back by a JV partner.