Land Bridging Finance: Unlocking Opportunities for Developers and Investors

Purchasing or refinancing land often requires a different financial approach than buying built property. Loans for land and land bridge loans are key options for financing land purchases and development, providing tailored solutions for various land acquisition needs. Land bridging finance can help raise finance quickly for land acquisition, making it possible to act on opportunities when traditional funding is not available. Whether it’s for development, planning gains, which refers to increasing land value through obtaining or amending planning permissions or long-term investment, bridging finance for land offers a flexible and fast funding solution to help clients secure opportunities without delay. Planning gain finance is also available to help maximise land value, especially when purchasing land without initial planning permission or seeking to enhance planning consents.

Land bridging finance offers short-term funding solutions for both residential and commercial properties, providing quick access to capital, flexible repayment options, and higher loan-to-value ratios.

What Is Land Bridging Finance?

Land bridging loans are short-term, secured loans used to purchase or refinance land. These facilities can be arranged quickly and are typically secured against the land itself. As a type of bridge loan or bridge loans, they are considered both a short term loan and a secured loan. Land bridging loans are suitable for land with or without planning permission, agricultural plots, residential land, commercial properties, or sites earmarked for future development. They are often used when obtaining planning is anticipated or in progress.

Because land is seen as higher risk than developed property, these loans require careful assessment and often come with lower Loan-to-Value (LTV) ratios. Lenders assess the current market value and land value when determining eligibility and loan size. However, the flexibility and speed they offer make them a valuable tool for landowners, developers, and investors.

When to Use Bridging Finance for Land

• Acquiring land quickly before planning is secured
• Refinancing existing land holdings to release capital for other projects
• Securing land at property auctions, where immediate payment is required
• Bridging the funding gap while waiting for planning approvals
• Unlocking equity from land for business or development use
• Raise capital for land purchases or development projects
• Using bridging finance to purchase land quickly for business expansion or investment

Development Finance Options

For property developers and investors, combining land bridging finance with development finance can unlock a comprehensive funding solution for a wide range of development projects. While land bridging finance provides the immediate capital needed for purchasing land or securing a site, development finance steps in to fund the construction phase and cover ongoing development costs. This dual approach allows property developers to move seamlessly from acquisition to build, ensuring projects stay on track and on budget. Lenders offering development finance will assess the viability of the proposed project, the experience of the developer, and the anticipated return on investment. By leveraging both bridging finance and development finance, developers can access the flexibility and capital required to bring ambitious property development projects to life, from initial land purchase through to completion.

Example Terms Offered

A developer sought to purchase a site valued at approximately £1.8 million, with outline planning permission expected within three months. We arranged a bridging loan of around £1.2 million (circa 65% LTV), which represented the maximum loan available based on the land's value and planning status. The gross loan amount was used to calculate broker fees, which were charged as a percentage of the total loan. The loan term was set at 12 months, with loan terms structured to align with the client's exit strategy of selling the land or refinancing after planning was secured.

A valuation report was required to confirm the market value, with valuation fees and legal fees (or legal costs) paid upfront as part of the overall borrowing costs. The client was fully informed about all borrowing costs, including potential exit fees and early repayment charges that could apply if the loan was repaid ahead of schedule. We also advised the client about the maximum age limit for applicants, typically set at 85 years, but noted that exceptions may be possible depending on the strength of the exit strategy.

This allowed the client to hold the asset and prepare for a development facility.

Benefits of Land Bridging Loans

• Key Benefits: Land bridging loans offer quick access to funds, flexible repayment options, and solutions tailored to complex land transactions.
• No Monthly Repayments: Many land bridging loans do not require monthly repayments, with interest often rolled up until the end of the term, providing greater flexibility for borrowers.
• Flexible Lending Criteria: These loans feature less rigid credit requirements, making them accessible to a wider range of borrowers, including those who may not qualify for traditional finance.
• Specialist Lenders: Access to specialist lenders who can tailor solutions for complex land purchases, refinancing, or development projects.
• Speed: Complete in weeks, not months
• Access to Capital: Use land assets to unlock funding
• Flexible Terms: Structured around your timeline and planning expectations
• Specialist Lending: Available even for land without full planning permission

Challenges and Considerations

Land bridging loans can be more complex due to valuation challenges, planning uncertainties, and limited exit options. This is why working with a specialist broker is crucial. Lenders use specific lending criteria to assess applications, and some offer flexible lending criteria to accommodate borrowers with unique circumstances. Applicants with adverse credit may still be eligible for land bridging loans, depending on the lender's policies. It is essential to conduct thorough due diligence before proceeding, including verifying clear title, understanding zoning laws, and checking for any liens or encumbrances. Offshore companies and experienced developers are among the types of clients who can access these loans. Commercial finance can also serve as an alternative or complementary funding option for land-related projects.

At Global Bridging Finance, we assess the viability of your land project and source appropriate lenders who understand the unique nature of land transactions. We help clients navigate:

• Planning status and potential uplift
• Site access and development prospects
• Exit strategies, whether via sale, development finance, or long-term refinance

Application Process

Securing land bridging finance involves a straightforward but thorough application process designed to assess both the land and the borrower’s financial position. Applicants will need to provide detailed information about the land in question, including its current value, location, and planning status. Lenders will also request financial documentation, such as proof of income, credit history, and details of any existing debts. This information helps lenders determine eligibility for a land bridging loan and set appropriate loan amounts and interest rates. Once the assessment is complete, successful applicants receive a formal offer outlining the bridging loan’s terms, including the loan amount, interest rate, and repayment schedule. It’s essential to review these terms carefully before accepting. Working with a reputable broker can streamline the application process, ensuring you find the most suitable land bridging finance option for your needs and circumstances.

Agricultural Land Finance

Agricultural land finance is a specialised form of land bridging finance tailored to the needs of farmers and agricultural businesses. Whether you’re looking to purchase additional agricultural land, refinance existing holdings, or fund essential improvements and equipment, bridging finance offers a flexible solution. Lenders in this sector consider the land’s value, the borrower’s agricultural experience, and the potential for future income generation when assessing applications. With agricultural land finance, farmers can expand their operations, invest in new agricultural buildings, or diversify their activities to boost productivity and profitability. By providing quick access to capital, land finance helps agricultural businesses overcome financial barriers and achieve long-term growth.

Exit Strategy

A well-defined exit strategy is essential when applying for land bridging finance, as it demonstrates to lenders how you intend to repay the bridging loan at the end of the term. Common exit strategies include selling the land, refinancing with a long-term commercial mortgage, or using proceeds from another asset sale. Lenders will closely examine your planned exit strategy to ensure it is realistic and achievable, as this directly impacts the approval and terms of your land bridging loan. Borrowers should carefully consider their exit options before proceeding, as a robust exit strategy reduces risk and increases the likelihood of a successful outcome. Partnering with an experienced broker can help you develop and present a strong exit strategy, giving you the best chance of securing the right bridging finance for your land acquisition or development project.

Is It Right for You?

Land bridging loans are ideal for:

• Property developers waiting for planning permission
• Investors purchasing land below market value
• Businesses leveraging land assets for expansion
• Borrowers who want to use residential property or commercial property as collateral
• Those seeking a secured loan, using valuable assets to obtain financing

Contact Us

If you're exploring land acquisition or refinancing and need a fast, flexible finance solution, contact Global Bridging Finance today. Our expertise in land bridging finance ensures you get tailored support and funding that meets your goals.