A bridging loan for change of use is short-term property finance used to purchase or refinance a building before planning permission for its new use class has been granted. Lenders assess the property on its current use and value, then price in the planning risk, allowing developers and investors to move quickly on a site while the local authority decision is still pending. The exit is usually a refinance or sale once consent is confirmed.
We arrange this type of lending regularly at Boxx Finance, and it's one of the more misunderstood corners of the bridging market. Borrowers often assume lenders will simply refuse to touch a property without planning permission in place. That's not true. What they will do is price the uncertainty into the loan-to-value and, occasionally, the rate. Understanding how that pricing works is the difference between a smooth application and a wasted week chasing lenders who were never going to say yes. If you'd like to talk through a specific site, you can get a bridging loan quote before you commit to anything.
We see this scenario play out several times a month. A client spots a former bank branch on a high street, or a tired care home, or a redundant agricultural barn, and immediately sees the residential or commercial potential. The trouble is that potential exists only on paper until the council agrees. Short-term property finance is what lets you own the asset while that agreement is being sought. For a broader introduction to how this lending works, our guide on what bridging finance actually is is a useful starting point.
Not every case involves a full planning application from scratch. Plenty of our enquiries relate to properties with permitted development rights already in place, where the works themselves are relatively straightforward, but the borrower still needs to complete a purchase before the prior approval process has run its course. Lenders treat these slightly differently to a full discretionary planning application, usually with greater comfort around timescale and outcome.
What this means in practice
In practice, it means you can secure a property, start the planning process, or complete works ahead of a formal use class change, without waiting for the council to make its decision before you can access funding.
This matters because good sites don't wait around. A commercial unit with obvious residential conversion potential, or a pub with permitted development rights into flats, often sells fast, sometimes at auction, sometimes off-market to whoever can complete first. If your funding is contingent on planning being granted, you'll lose the property to someone using bridging loans instead.
Take a typical example we've dealt with. A client wanted to buy a vacant office building in the Midlands for £450,000, with a clear plan to convert it into eight flats under permitted development rights. Planning wasn't yet submitted. A bridging lender agreed to lend 65% against the current office valuation, around £292,500, allowing the purchase to complete within three weeks. Had the client waited for planning consent before arranging finance, the vendor would almost certainly have sold to a cash buyer instead.
To put the wider cost into context, that £292,500 loan at a monthly rate of 0.85% would cost roughly £2,486 per month in interest, most of which is typically rolled up rather than paid monthly, so the borrower isn't drawing that from cashflow each month. Over a nine month term while planning was progressed and the flats prepared for sale or refinance, the rolled interest would total around £22,370, plus arrangement fees. Clients are often surprised how manageable that figure looks once it's set against the profit on eight completed flats.
The lender's underwriting reflects the current, unconsented use. A disused office block is valued and lent against as an office block, not as the block of flats it might become. The uplift in value that comes with planning consent is your equity gain, not something most bridging lenders will lend against upfront.
Loan-to-value, rates and fees
A handful of specialist lenders will consider gross development value or a probable-use valuation once a planning application has actually been submitted, particularly if the local planning history for that street or area shows a strong pattern of approvals. This is rarely offered on day one. It tends to come into play once you can show the council has acknowledged the application and there are no obvious objections on file.
Loan-to-value on these deals typically sits between 55% and 70% of the current use value, depending on the lender, the location, and how straightforward the planning story is. A straightforward office-to-residential conversion under permitted development rights is viewed very differently to a full change of use application on a listed building in a conservation area. The latter carries far more planning risk, and lenders will reflect that in a lower LTV or a higher rate. For a wider view of current pricing, see our breakdown of current bridging loan rates across the market.
Rates on change of use bridging in the current market tend to range from around 0.65% to 1.1% per month, depending on the loan size, the borrower's experience, and the perceived planning risk. A borrower with a strong track record of similar conversions, backed by a solicitor and planning consultant who know the local authority well, will usually secure sharper pricing than a first-time developer with no comparable projects behind them.
Arrangement fees typically sit between 1.5% and 2% of the gross loan, with some lenders also charging an exit fee, though many of the more competitive lenders in this space have moved away from exit fees to stay attractive. It's worth checking the total cost of the facility rather than focusing purely on the headline monthly rate, since some lenders load fees at the front end while others spread cost differently across the term.
On a £300,000 loan, a 2% arrangement fee works out at £6,000, deducted from the gross advance rather than paid upfront in most cases. Add valuation fees of anywhere between £500 and £1,500 depending on the property type and complexity, plus legal costs which often run to £1,500 to £2,500 for the borrower's own solicitor, and it becomes clear why the all-in cost of a bridge needs setting out clearly before a client commits. We always send clients a full breakdown before they instruct anyone, so there are no surprises at completion.
Term length and timing
Term length usually runs from six to eighteen months, giving enough runway to submit a planning application, go through committee if needed, and then arrange a refinance or sale once consent is granted. Six months is often too tight if there's any chance of a planning appeal or a resubmission, so we generally encourage clients to build in some contingency rather than cutting it fine.
We've seen cases where a straightforward application was expected to take eight weeks, then dragged on for five months because of a single objection from a neighbour or a request for further ecological surveys. Building a realistic buffer into the loan term avoids the scramble of arranging an extension under pressure, which rarely gets you the best terms from a lender.
Speed of completion is one of the main reasons borrowers choose this route in the first place. Where a standard mortgage application might take eight to twelve weeks, a bridging loan for change of use can often complete in two to four weeks, sometimes faster if the valuation and legal work move quickly. That speed is usually the whole point, since it's what allows you to beat other buyers to a site with obvious conversion potential.
In practical terms, that timeline depends heavily on how quickly the borrower can provide certain documents. Proof of funds for any deposit, a clear schedule of works or planning intentions, ID and source of funds paperwork, and details of any other properties owned all need to be ready early. Clients who gather this before the application even starts routinely shave a week or more off the process compared with those chasing paperwork mid-application.
Exit strategy and lender expectations
We always advise clients to get their planning consultant involved before they even approach a lender. A short pre-application enquiry with the local authority, even an informal one, can give a lender far more comfort than a bare application with no local authority engagement at all. It also helps establish realistic timescales, since some councils are notoriously slower than others in reaching a decision.
Exit strategy is scrutinised closely by lenders on these deals, arguably more closely than on a standard bridging case. Because the loan is priced against current use rather than the uplifted value, lenders want to see a credible route out once planning is granted. That's usually either a term mortgage refinance based on the new use, or a sale to an investor or owner-occupier who wants the converted asset.
Some lenders will ask for evidence of an agreement in principle from a term lender before they'll release funds, particularly on larger facilities. Others are comfortable relying on the strength of the borrower's track record and the general market appetite for the finished product, whether that's flats, an HMO, or commercial units. It varies quite a bit between lenders, which is where a broker's knowledge of individual lender appetite becomes genuinely useful. Choosing the right lender matters here, and our comparison of the best bridging loan lenders in the UK is worth reading before you approach anyone directly.
Rural sites and permitted development
We also see a fair amount of change of use bridging on rural and semi-rural sites, particularly barn conversions and redundant agricultural buildings being converted to residential use under Class Q permitted development rights. These cases carry their own quirks, since Class Q has specific criteria around the building's structural condition and size that can affect both the planning outcome and the lender's comfort with the deal.
Structural surveys often play a bigger part in these rural cases than borrowers expect. A barn that looks solid enough to convert on the surface can be rejected under Class Q if it needs substantial rebuilding rather than conversion, and lenders will usually want a structural engineer's report early on to confirm the building genuinely qualifies. Getting this wrong can unravel a deal weeks into the process, so it's far better checked before finance is even applied for.
Because every case is different, and because lender appetite for planning risk shifts fairly often depending on market conditions, it's worth speaking to a broker who places this type of lending regularly rather than approaching lenders directly one by one. At Boxx Finance, we work with a panel of lenders who each treat planning risk differently, and matching the right lender to the right site is usually what makes the difference between a deal that completes smoothly and one that stalls. We arrange this lending for clients seeking bridging loans in London, bridging loans in Birmingham, bridging loans in Norwich, and bridging loans in Reading, among many other locations across the UK.
