Permitted Development Bridging Loans | Short Term Funding

Permitted Development Bridging Loans

Permitted Development Bridging Loans

Permitted development rights allow property owners to convert certain types of buildings — most commonly offices, light industrial units, and retail premises — into residential dwellings without submitting a full planning application. Instead, a simpler prior approval process is used, assessing transport, contamination, flooding, and noise impacts rather than the full range of planning considerations. Permitted development bridging loans provide the short-term capital to acquire commercial buildings suitable for PD conversion, fund the conversion works, and bridge the period until the completed residential units are sold or refinanced.

Platinum Global Bridging Finance arranges permitted development bridging loans from our office at 64 Knightsbridge, London. We structure facilities from £250,000 to £15 million covering acquisition, prior approval, and conversion costs. Indicative terms are delivered within 24 hours.

What Is Permitted Development?

Permitted development (PD) is a right granted under the Town and Country Planning (General Permitted Development) (England) Order 2015 (as amended) that allows certain changes of use without a full planning application. The most commercially significant PD rights for property investors are Class MA (commercial, business and service use to residential), Class G (retail to residential for buildings up to 150 sqm), and Class Q (agricultural buildings to residential). Class MA, which came into force in August 2021, allows the conversion of Class E commercial premises (offices, shops, restaurants, light industrial) to residential, subject to prior approval.

Prior approval is not the same as automatic approval. The local authority assesses the proposal against specific criteria — transport and highways, contamination, flooding risk, noise from commercial premises, natural light provision, and fire safety — and can refuse if these criteria are not met. However, the process is significantly faster and more predictable than a full planning application, typically taking 56 days from submission.

How PD Bridging Finance Works

Stage 1: Acquisition

The investor identifies a commercial building suitable for PD conversion. A bridging loan funds the acquisition, secured against the commercial building at its current value.

Stage 2: Prior Approval

The prior approval application is submitted to the local planning authority. The 56-day determination period begins.

Stage 3: Conversion Works

Once prior approval is granted, conversion works begin. The works may be funded from the original bridging facility, a separate refurbishment bridging loan with staged drawdowns, or a transition to full development finance for larger schemes.

Stage 4: Exit

The completed residential units are either sold individually, refinanced onto buy-to-let mortgages, or sold as a block to an investor.

Why PD Conversions Attract Investors

The Value Arbitrage

The fundamental economics of PD conversion are driven by the difference between commercial and residential property values. A 5,000 sq ft office building purchased for £500,000 might yield 6-8 apartments with a combined residential value of £1.5-2.0 million after conversion.

Speed and Certainty

Prior approval takes 56 days versus 8-13 weeks for a full planning application. The criteria are narrower and more objective, making the outcome more predictable.

Scalability

PD conversion is a repeatable model. Each project is typically held in a separate SPV with its own bridging facility.

Worked Example: Office-to-Residential PD Conversion

An investor acquires a 4,000 sq ft office building in Croydon for £600,000. Prior approval is obtained under Class MA for conversion to 8 apartments. Estimated conversion cost: £280,000. Estimated completed value: £1.6 million.

Bridging facility: £420,000 acquisition finance (70% LTV) plus £280,000 conversion costs = £700,000 total facility. Interest rate: 0.70% per month on drawn funds. Term: 12 months. Total interest (on average drawn balance of £560,000 over 10 months): approximately £39,200. Arrangement fee at 2%: £14,000. Professional fees: £25,000. Legal fees: £4,000. Total project cost: approximately £923,200. Gross development value: £1,600,000. Gross profit: approximately £676,800 before tax.

PD Bridging: What We Arrange

Loan sizes from £250,000 to £15 million. LTV up to 70% on the commercial acquisition value, with additional facility for conversion costs released in staged drawdowns. Interest rates from 0.65% per month. Terms from 6 to 24 months. Available to individuals, limited companies, and SPVs. We charge no broker fee on facilities of £500,000 or above.

Key Considerations for PD Bridging

Not all commercial buildings are suitable for PD conversion. The building must have been in commercial use for at least 2 continuous years before the application. Article 4 Directions in some areas — particularly parts of central London — remove PD rights entirely. The building must meet minimum space standards for residential units. Natural light requirements mean deep-plan office buildings may not be suitable. We recommend commissioning a PD feasibility assessment before committing to a purchase.

Frequently Asked Questions

What types of buildings can be converted under permitted development?

Class E premises (offices, shops, restaurants, cafes, light industrial, gyms, health centres) can be converted to residential under Class MA. Agricultural buildings can be converted under Class Q. The building must not exceed 1,500 sqm for Class MA.

Can PD rights be removed by the local authority?

Yes, through Article 4 Directions. Several London boroughs have Article 4 Directions that remove PD rights for office-to-residential conversions.

How long does the prior approval process take?

The local authority has 56 days from the date of a valid application to determine a prior approval application.

Can I fund the conversion works through the same bridging loan?

Yes. We structure combined acquisition-and-conversion bridging facilities with the conversion element drawn down in stages.

Does Platinum Global charge a fee?

No broker fee on facilities of £500,000 or above.

Related Bridging Finance

• Bridging Loans — our main UK bridging loans page
• Land Purchase Bridging Loans
• Limited Company Bridging Loans
• Large Bridging Loans
• Refurbishment Bridging Finance
• Development Finance
• Commercial Bridging Finance
• London Bridging Loans