The extension of permitted development rights is providing continued opportunity for investors and lenders are stepping up to provide funding options, sometimes even on the ‘hope value’ of the security.
In recent years there has been a significant expansion in permitted development rights, enabling the conversion of commercial or agricultural buildings to residential use without having to go through the formal planning procedure.
A study by RICS found that almost 100,000 new dwellings have been created under the extended permitted development rights between 2010 and 2017. The bulk of these additional dwelling have been small scale, less than 10 units, conversion from offices and agricultural buildings to residential use. The study found that these small schemes have been broadly distributed through cities and towns without any significant regional trends and that they tend to be found in locations with relatively low property values. Larger scales conversions are relatively uncommon and most frequently concentrated in the South East.
We are getting a lot of enquiries from developers who want to take advantage of permitted development rights there are some great opportunities for investors. From our experience, permitted development is proving particularly popular in areas with universities and lots of vacant offices as these areas have the right type of property for development and a sustainable source of demand for accommodation.
Lenders are continuing to improve their offering for permitted development and there are lots of options for developers to borrow up to 75% of the gross development value.
READ our case study of the month to find out how we secured finance on the hope value of a development site