Permitted Development Finance in 2026: Funding a Conversion Without Full Planning

Two floors of offices above a parade of shops in Wigan, empty since the tenant handed the keys back, and the particulars carry one line that decides the whole deal: Class MA potential. No prior approval has been applied for. No drawings exist. The agent wants offers by Friday. An investor reads that line as five flats and a profit. An underwriter reads it as an assertion about planning law that nobody has tested yet, made by somebody paid to sell the building. Both readings can be right, but only one of them gets funded on day one. Permitted development rights are the reason conversions like this are worth doing at all, because they remove the need for a full planning application. They are also the reason lenders ask a longer set of questions than they would on an ordinary refurbishment, because the right to convert is asserted rather than granted, and a facility sized against five finished flats is exposed to whether that assertion survives contact with the council.

Refurbishment Loan is a trading name of Lenzie Consulting Ltd, company number 08174104. We are a UK finance arranger and introducer, not a lender. Bridging and refurbishment finance secured on investment property is unregulated lending that sits outside the Financial Conduct Authority’s regulated mortgage perimeter, and the business holds no FCA authorisation because the products it arranges are unregulated. We do not arrange regulated bridging, residential mortgages, or any loan secured on a property the borrower or an immediate family member lives in or intends to live in, and those enquiries are referred to a regulated firm. Every figure below is an indicative range, confirmed only in a formal offer and never on a website.

In the episode below, Georgina walks through how a conversion gets priced when the planning position is a prior approval notice rather than a planning grant.

Prior approval is a different document, and the money is priced against the difference

A planning permission is a decision that the council has considered your scheme in the round and said yes. A prior approval is narrower. Parliament has already said the change of use is acceptable in principle, and the council is only allowed to assess a short statutory list of matters: flooding, contamination, transport and highways, noise from commercial neighbours, natural light, and the national space standards for the finished units. The council has 56 days to determine it. If the authority says nothing inside that window, on most classes the approval is deemed granted.

That is a thinner document than a planning grant, and lenders treat it as one. A prior approval notice does not confirm that your layout works, that building regulations will pass, or that the conditions attached can be discharged cheaply. The underwriting question is therefore what the paperwork protects the lender against if the project stalls halfway and the building has to be sold as it stands.

Permitted does not mean automatic, and an underwriter reads the word the way a planning officer does, not the way an estate agent does.

Permitted development finance is heavy refurbishment money, whatever the planning route

The planning shortcut does not make the building work lighter. Taking a commercial floorplate to residential means drainage, new soil stacks, compartmentation, fire doors, acoustic separation, thermal upgrades, windows where there were none and a full rewire. That is structural, it changes the use and it needs building regulations sign off, so the case sits with heavy refurbishment terms rather than with a cosmetic bridge.

The practical consequences are specific. Pricing sits in the 0.85 to 1.15 percent a month band rather than the 0.75 to 0.99 percent band a light job attracts. The leverage is measured against gross development value at up to 75 percent LTGDV, not against the purchase price, which is what lets a facility exceed the day one worth of an empty office. Works money arrives in staged drawdowns signed off by a quantity surveyor rather than reimbursed in arrears on receipts. Facilities run from 100,000 to 5 million pounds over 6 to 24 months, and the lender arrangement fee lands between 1.5 and 2 percent.

The evidence that widens the lender panel

Three documents move a permitted development case from a handful of lenders to a proper lender panel, and each one is worth roughly a quarter of a percent a month in pricing.

Evidence	What it proves	Effect on terms
Prior approval notice granted	The council has determined the statutory matters	Widest panel, best pricing, most lenders want it before completion
Lawful development certificate	The council has formally confirmed the use is lawful	Strongest position, adds weeks to the timetable
Planning consultant’s written opinion	A professional has confirmed the rights apply	Accepted by fewer lenders, usually where the borrower has a track record
Article 4 search clear	The council has not removed PD rights on this street	Non negotiable, checked before exchange not after

Article 4 directions deserve the extra line. Councils can and do withdraw permitted development rights across a defined area, and a building inside one has no rights to rely on. The search picks it up, but only if somebody runs it before contracts are exchanged.

Worked example: a Class MA office conversion in Wigan

The building above, bought and converted into five one bedroom flats. Purchase at 310,000 pounds, works of 295,000 pounds, gross development value of 820,000 pounds based on five units at 164,000 pounds each. Prior approval granted before completion, so the facility is priced at the keener end of the heavy band at 0.95 percent a month over 15 months.

Line	Figure
Purchase price	£310,000
Day one advance (65% of purchase)	£201,500
Works facility (staged)	£295,000
Total drawable	£496,500
Arrangement fee at 2%	£9,930
Interest at 0.95% pm on the drawn balance	approx £55,600
Peak debt including rolled interest	£552,100
Peak debt against £820,000 GDV	67.3% LTGDV

The interest number is the one investors get wrong. On a staged facility the lender charges on what has actually been drawn, not on the full 496,500 pounds from day one, so the cost depends on how quickly the works money goes out. An average drawn balance of roughly 390,000 pounds across the 15 months produces the 55,600 pound figure above. Draw faster and it rises; a slow first trade and it falls.

Cash into the deal is the 108,500 pound deposit, the 9,930 pound arrangement fee and roughly 14,000 pounds of valuation, legal and QS set up costs, before stamp duty. On a sale of all five units the scheme returns around 135,470 pounds before stamp duty and sale costs, a margin of about 16.5 percent on gross development value. That margin is the buffer that absorbs a cost overrun, which is why lenders look at it before they look at the rate.

When prior approval is refused, and what the facility does next

Refusal is the risk that makes permitted development finance different from ordinary refurbishment lending. A council can refuse on any statutory matter, and the two that bite most often are natural light and the national space standards. A deep floorplate cannot always give every habitable room a window, and a scheme that shaves a flat to 36 square metres to fit one more unit in fails on space standards alone.

The finance responds in one of three ways, and which one applies is agreed at offer stage rather than discovered later. Where completion is conditional on the notice, the purchase simply does not happen and the cost is the abortive valuation and legal fees. Where the vendor would not wait and a standard bridge bought the building first, the borrower owns an empty commercial asset on bridging money, and the exit reverts to a sale or a commercial term loan while a revised scheme goes back in. Where approval is granted with expensive conditions, on contamination or on transport contributions, the works budget absorbs the discharge cost and the QS reprices the schedule before the next drawdown is released.

The clean route is to agree the purchase, submit for prior approval, then run valuation and legals in parallel while the 56 day clock runs, so the facility and the notice land together. Buying first and applying later is legitimate when the vendor will not hold, but it should be a priced decision rather than an optimistic one.

The exit is agreed before the first drawdown

Two exits carry these schemes. A sale of the finished units repays the facility from completion monies, which suits an investor who wants the capital back. A refinance onto term debt at the improved value suits a landlord holding the flats, and the lender tests the projected rents against interest cover before the bridge completes, not after.

Either way the exit is underwritten on day one. One facility that buys the building and funds the works only makes sense if there is a credible way out of it inside the term, and a conversion with 18 months of work in a 12 month facility is a refinance waiting to happen at the worst possible price.

2026 outlook for permitted development conversions

The Bank of England held base rate at 3.75 percent at the July 2026 decision. Bridging money is priced off a lender’s cost of capital rather than off base rate directly, so the hold has kept the heavy refurbishment band steady at 0.85 to 1.15 percent a month through the year. What has moved is appetite. More lenders on our lender panel now look at Class MA cases on a planning consultant’s opinion rather than insisting on a granted notice, which takes four to eight weeks off the timetable on clean buildings.

Search demand says the same thing from the other end. Permitted development finance runs at roughly 10 UK searches a month on September 2026 data, a small expert audience rather than a mass one. The files that arrive with the Article 4 search already done are the ones that complete.

FAQ

Can I get finance before prior approval is granted? Yes, but on different terms. Some lenders offer with completion conditional on the notice landing, which costs nothing extra if approval comes through. Others fund a purchase bridge against the commercial value, then refinance into the conversion facility once approval is granted, which means two sets of fees. We model both before you commit to a purchase date.

Does a lawful development certificate change the pricing? It widens the panel rather than cutting the headline rate. A certificate is the council’s formal confirmation that the use is lawful, so it removes the planning argument from the underwrite. More lenders look at the case, and competition between them moves the rate, typically by a quarter of a percent a month.

What happens to my facility if the council attaches conditions? Conditions are normal and most are dischargeable, so the problem is cost and time rather than principle. Contamination surveys, acoustic mitigation and transport contributions all have a price, and the lender will want the quantity surveyor to reprice the schedule before releasing the next drawdown. Build a contingency of at least 10 percent into the works budget for that reason.

Is permitted development finance available to a limited company? Yes, and most of these facilities are written to a special purpose vehicle with personal guarantees from the directors. That is the normal structure for a conversion, it suits investors refinancing the finished flats onto limited company buy to let products, and pricing is broadly the same as borrowing personally.

Talk to us

Buying on the strength of permitted development rights? The conversation to have before you exchange is about permitted development finance and where you sit on the prior approval timetable. Tell us the class you rely on, whether the Article 4 search is clear and what the finished units are worth, and we will map the heavy refurbishment terms open at each stage. Where the vendor will not wait, one facility that buys the building and funds the works is the alternative we price. See also where lenders draw the line between light and heavy schemes.

All figures in this article are indicative ranges for UK refurbishment finance in 2026, confirmed only in a formal offer, and are not an offer, a quote or a financial promotion. Any facility is subject to lender terms, valuation and full underwriting. This article was written by Matt Lenzie.