Bridging Loan For Barn Conversion

By Georgia Galloway | Friday 8th September | 5 minute read

Understanding the intricacies of barn conversions is key to unlocking potential financial opportunities. A bridging loan could be the ideal solution to kickstart your venture.

The crux of the issue is that most lenders consider the property's current habitable status rather than its potential value post-conversion when offering residential mortgages.

This can make securing a traditional conversion mortgage for barn transformations particularly daunting due to their perceived higher risk profile and non-standard nature.

Barn Conversion aerial view

Barn Conversion: Unlocking Potential with a Bridging Loan

Barn conversions present a unique opportunity for property developers and investors, turning non-residential buildings into attractive residential properties. However, transforming these rustic structures can be challenging financially, as traditional lenders often hesitate until they are fully habitable.

That's where bridging loans come in handy - acting as short-term finance that bridges this financial gap. These loans provide immediate access to funds during critical stages of the conversion process before securing long-term funding or standard mortgage eligibility.

Bridging Loan For Barn Conversion: Your Ultimate Guide

Embarking on a barn conversion project is not just about securing finance. It's also about navigating the maze of planning permissions 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.

New 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.

If the listed status has been granted due to its architectural or historical significance, another layer of complexity gets added because additional requirements need fulfilment, such as obtaining listed building consent alongside standard approvals.

Importance of Listed Building Consent

Listed Building Consent would become necessary if works affecting the character or special interest structure are planned - including alteration or demolition, even those that wouldn't typically require authorisation. 

Cost Considerations in Barn Conversion Projects

In the world of property development, barn conversions hold a special appeal. However, they also present unique financial considerations beyond traditional house-building projects.

Purchasing Cost and What it Entails

The initial cost you'll encounter when embarking on a barn conversion project is the property's purchase price. The cost of the barn conversion project will depend largely on where it's situated, its size, and its state. 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.

Tackling Renovation Expenses

Reworking an old barn into a liveable space requires considerable outlay over and above just acquisition costs. These expenses encompass materials required for renovation work, labour charges, and fees for architects or designers who are instrumental in meticulously planning your transformation.

Sometimes specialist contractors may need hiring if working with older buildings or specific types of construction material; these specialists come at premium rates, further escalating renovation costs.

Factoring 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 atop estimated conversion costs specifically dedicated to handling unpredictable expenditures arising during course transformations.

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 - 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.

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.

Get a quote

Call our friendly team on 01202 612934, we're ready to help.

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.

We use cookies. By using the website you agree with our use of cookies. For more information, please read our privacy policy.

Okay, got it!