How to finance a barn conversion

By Georgia Galloway | Friday 8th September 2023 | 8 minute read

A bridging loan and/or development finance can finance a barn conversion. 

Mortgage lenders don't lend against uninhabitable property or buildings of non-traditional construction, so a barn conversion, which is often both, can be challenging to finance. Bridging loans and property development finance offer developers and home-owner-come-barn-converters a potential funding source, enabling them to access the maximum finance available for conversion projects in whatever state the barn currently is.   

Barn Conversion aerial view

Financing a barn conversion involves navigating the challenges of mortgage lenders' reluctance to finance uninhabitable or non-traditionally constructed properties. Bridging loans and development finance are viable solutions, providing flexibility and tailored funding for the conversion process. These financial products cater specifically to developers and homeowners embarking on barn conversions, offering a pathway to transform agricultural buildings into unique residential or commercial spaces despite the complexities and higher interest rates associated with such specialised financing options. 


What is barn conversion finance?

Barn conversion finance funds the conversion of barns and agricultural buildings into habitable spaces, most often dwellings, but can be commercial units such as offices or holiday lets. The Barn conversion finance comes in two main parts: a bridging loan used to secure the site/land upon which the barn is situated, and development finance used to fund the conversion and construction aspects of the work. This finance can be either sourced as a bridging loan and/or development finance, depending on the size and extent of the conversion in question.

What is a barn conversion?

A barn conversion refers to transforming a barn, traditionally used for agricultural purposes, into a residential or commercial property. The barn may be of brick, stone, wood or steel construction, typically with a slate, tiled or metal roof. This conversion retains the barn's original structure and architectural features while adapting its interior to serve as a livable space. Barn conversions are popular for their unique character, spacious interiors, and the opportunity to preserve historical architecture within a modern living or working environment. They often involve significant renovation work to ensure the building meets building regulations, standards of comfort, safety, and efficiency. 

Is a bridging loan or development finance better for barn conversion finance?

Choosing between a bridging loan and development finance for barn conversion finance depends on the specifics of the project, and sometimes you may need both.

What is a bridging loan?

Bridging loans are short-term and typically used to secure funding while awaiting longer-term financing quickly. They're suitable for acquiring a site or dilapidated building, such as a barn, but have higher interest rates. Bridging loans are best used when the exit is fast. Development finance is a viable exit for a bridging loan.

What is development finance?

Development finance is longer-term and tailored for comprehensive construction or renovation projects, offering funds in stages based on project milestones. For a barn conversion, if you're planning extensive renovations and need funding throughout the project, development finance might be more appropriate due to its structured drawdowns and project-focused nature. Those structured drawdowns mean you'll only pay interest on the funds you are using.

What's the difference between a bridging loan and development finance?

The differences between a bridging loan and development finance are:

  1. How they're drawn down. Bridging loans are drawn in one lump, and development finance is in stages aligned with your build schedule. 
  2. The costs. Typically, bridging loans are more expensive than development finance.

Which is better - a bridging loan or development finance?

A bridging loan might be better if you anticipate your barn conversion as a quick project (1-4 months).

If you anticipate a more complex conversion or where the build schedule is longer than four months, then development finance is more likely better suited.


Barn conversion planning permission

Embarking on a barn conversion project is not just about securing finance. It's also about navigating the maze of barn conversion planning rules and agricultural restrictions, which can significantly influence your development plans. 

A key element to remember when applying for planning permission in the UK is that full planning permission will be required if you're looking at rebuilding rather than converting an existing barn. This ensures that all changes comply with local building regulations and won't adversely affect the environment or community.

Considerations for Use Class Change

The proposed use class change of the property from agricultural to residential accommodation while converting a barn also needs careful consideration during the application process.

Permitted Development Rights

In addition to regular planning permissions, there are permitted development rights (PDRs) that might apply depending on the nature of the work involved in your project. PDRs allow certain types of developments without needing specific consent from local authorities.

Class Q barn conversion

Rules were introduced under Class Q General Permitted Development Order (GPDO) back in 2014, allowing some farm buildings like barns to be converted into homes without express approval needed by planners. However, this comes with limitations regarding size and number, among other conditions, so understanding these beforehand becomes crucial before initiating any conversion activity.

Listed Building Consent

If the building has a listed status due to its architectural or historical significance, another layer of complexity gets added. Additional requirements must be completed, such as obtaining listed building consent. Your application must include a site plan, location plan, design and access statement, and a heritage assessment. The latter two should detail the architectural and historic significance of the building, the impact of the proposed works, and how the design principles have considered the historic context. Obtaining pre-application advice from the local authority can be very beneficial, saving time and resources by clarifying what modifications might be acceptable. Listed Building Consent is typically processed within eight weeks of application validation, including a 21-day consultation period for public comments. There's no fee for the consent application, but if it's combined with other planning applications, there might be fees for those parts. For detailed guidance and download the necessary application forms, visit your local authority's website or the Planning Portal. Always consult with your local authority's Conservation Officer early in your planning process to understand the specific requirements and likelihood of consent for your proposed works.

For more information, visit Historic England and the Planning Portal.

Barn Conversion Costs

The cost of converting a barn in the UK is a considerable financial commitment, influenced by a range of factors, including the size and condition of the barn, the materials used, and the project's complexity. On average, barn conversion costs can vary significantly. Small barn conversions might cost around £175,000, while steel frame barn conversions could average £275,000. The cost of barn conversions per square meter is generally around £1,700, but this can rise to £2,500 or more depending on the quality of finishes (staircase choice, window style, kitchen brand) and the building's condition.

Key cost considerations include the materials chosen, the barn's size, the amount of land it sits on, the complexity of its layout, added structural elements like walls, windows, and doors, the availability, proximity to and installation of utilities, and the desired finishes. The barn's current condition plays a significant role, with renovations of structures in poor condition costing more. Access to the site can also impact the price, especially in remote locations where bringing in heavy machinery may be challenging.

When planning a barn conversion, it's crucial to budget for additional costs such as underpinning for stability, dealing with asbestos, damp proofing, and ensuring the building has sufficient insulation. The conversion's complexity may necessitate consulting with specialists such as barn conversion architects to ensure the project is viable and won't exceed the property's final value. Always consider the long-term implications, such as the need for water and sewage connections for permanent residences.

Purchasing Cost

The initial cost you'll encounter when embarking on a barn conversion project is the property's purchase price. Popular locations for people specifically seeking barn conversions, such as Devon, Essex, Kent, Shropshire, Staffordshire and Worcestershire, drive up demand and command a premium, as do any prime locations for standard properties. 

The cost of the barn conversion project will depend largely on where it's situated, its size, and its condition. It's crucial to thoroughly research local market prices and seek expert advice before committing to any investment.

A comprehensive survey should be undertaken before finalising your purchase - this will help identify potential structural issues or other challenges which could significantly inflate your overall barn conversion cost.

The main factors that influence the initial purchasing costs of a barn are:

  1. Price of the barn and land upon which it sits
  2. Price of any access rights or additional land that connects the land to the local highway
  3. Stamp Duty Land Tax (STLD)
  4. Professional fees (such as Surveyors, Planning advisors, Conveyancing solicitors) 
  5. Cost of finance

Conversion Cost

The barn conversion cost will also depend largely on its location, size, and condition. Other factors such as labour and material availability will also impact the barn's conversion costs. For example, specialist contractors may sometimes need to be hired if they work with older buildings or specific types of construction material; these specialists come at premium rates, further escalating renovation costs.

The main factors that influence the conversion costs of a barn are:

  1. Labour costs
  2. Material costs 
  3. Hire costs (such as specialist cranes, access platforms, scaffolding or equipment)
  4. Professional fees (such as Architects, Interior designers, and Landscape designers)
  5. Cost of finance

Unexpected Costs Into Your Budget

Barn conversions often throw up surprises during renovations, leading to unforeseen expenditures not initially accounted for within budget estimations - after all, we're dealing here with aged structures, each carrying its own set of quirks.

Hence, always incorporate contingency funds within budget calculations; industry insiders recommend earmarking 10-20% extra on top of estimated conversion costs for handling unpredictable expenditures arising during conversions.

Bridging Loan For Barn Conversion

Property development, particularly barn conversions, can present substantial financial challenges. Traditional lending institutions often impose strict requirements and lengthy approval processes that are not conducive to the swift pace of property development.

Bridging loans provides a viable alternative for developers seeking an effective solution to these obstacles—these short-term financing options bridge between purchasing a property and securing long-term funding or disposing of another asset.

The Flexibility of Bridging Loans

The flexibility of bridging loans sets them apart from traditional mortgages or business loans, which have rigid terms and conditions. This grants developers greater latitude in planning their project timelines and budgets.

A notable benefit is that providers typically consider the potential value of the completed project rather than its current state when offering barn conversion loans - making it especially suitable for projects where significant improvements will substantially enhance property values.

Quick Approval Times

Another significant advantage of bridging finance is quick approval times - which is essential for time-sensitive projects like barn conversions. Funds from such loans can be accessed within days instead of weeks or months, typical with other forms of finance.

This rapid access to capital ensures work commences promptly - a vital factor in keeping renovation projects on schedule without overshooting budget constraints.

Tailored Solutions for Complex Developments

Funding complex developments such as converting old agricultural buildings into modern residential properties requires specialised knowledge about various aspects, including construction costs, market trends, legalities, etc., something traditional lenders may lack expertise in.

In contrast, Barn conversion Loans offer tailored solutions considering all these factors, simplifying what could otherwise be a complicated process. Thus, they become the ideal choice for ambitious redevelopment ventures.

Using a Bridge Loan To Make an Unmortgageable Property Mortgageable

Using a bridge loan to make an unmortgageable property mortgageable, such as a barn conversion, is a strategy that some property buyers employ to facilitate purchasing and renovating a property that may not meet traditional mortgage requirements initially. Here's how it generally works: 

Bridge Loan: A bridge loan is a short-term financing option that helps bridge the gap between purchasing a new property and selling an existing property. In this case, it could be used to acquire the unmortgageable barn conversion property. 

Unmortgageable Property: Some properties, like barn conversions or properties needing significant renovation, may not meet the standard criteria for a traditional mortgage. This could be due to incomplete construction, lack of essential amenities, or structural problems. 

Renovation: The bridge loan funds can be used to finance the necessary renovations or improvements required to bring the property up to a condition where it meets the criteria for a conventional mortgage. 

Property Transformation: As the renovations are completed, the property's value may increase, and it could become eligible for a regular mortgage from a traditional lender.

Navigating the financing of a barn conversion requires understanding the nuances between bridging loans and development finance, each tailored to different stages and complexities of the project. With mortgage lenders often hesitant to fund such non-traditional properties, these alternative financial solutions provide vital support, enabling the transformation of agricultural buildings into unique and habitable spaces. 


We're experienced financial specialists who arrange short-term bridging loans for property owners, securing you the best deal from over 200 bridging loan providers, including private investors and family offices.

Get expert assistance today; we're on hand to answer any questions about bridging loans.

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Bridging Loans for Barn Conversions FAQs

How much can I borrow for a barn conversion?

The amount you can borrow depends on the lender's assessment of your project and financial situation. Bridging loans can range from £26k to millions.

What are the criteria for getting a bridging loan?

Lenders typically look at your exit strategy and property value. However, each lender has unique criteria; some may also consider your experience with similar projects.

How much can you borrow on a bridging loan?

Bridging loans are usually up to 80% of the property type, value, or purchase price. But this varies among lenders and depends on the security offered and repayment plan.

Is it worth getting a bridging loan?

If traditional financing isn't available or too slow for your project timeline, yes. Bridging loans offer quick access to funds, but remember they're short-term solutions with higher interest rates.

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