Lendus.

Conversion Development Finance

Finance for changing the use of an existing building — from offices to flats, barns to homes, or commercial units to residential — typically under permitted development rights or full planning permission.

200+ UK lenders
2-minute application
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FCA-regulated brokers

Rates

7.0% – 12.0%

per annum

LTGDV

Up to 65%

LTC

Up to 80%

Timeline

9-18 months

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Finance structure

PDR Conversion Loan

Rate
7.0% - 10.0%
LTC
Up to 80%

Best for: Office-to-residential conversions under Class MA permitted development rights with pre-application confirmation

Full Planning Conversion

Rate
8.0% - 12.0%
LTC
Up to 75%

Best for: Barn conversions, listed buildings or complex change-of-use requiring full planning approval

Mezzanine

Rate
13% - 18%
LTC
Up to 90%

Best for: Developers with strong appraisals but limited equity, particularly on multi-unit urban conversion schemes

Key considerations

Exit strategies

Sale of converted residential or mixed-use units
Refinance to BTL portfolio or commercial investment mortgage

Eligibility

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Market context

Conversion lending has grown significantly since the expansion of permitted development rights in 2021, with Class MA enabling thousands of redundant town-centre commercial units to be converted to residential use without full planning permission. An estimated 60,000–80,000 homes per year are now delivered through change-of-use conversions in England, making it one of the fastest-growing segments of development finance. The average conversion project in the UK creates 8–15 residential units and completes in under 18 months, making it attractive to lenders who prefer shorter loan terms than ground-up schemes.

Frequently asked questions

What is Class MA permitted development and how does it affect my finance options?
Class MA is the permitted development right introduced in 2021 that allows commercial buildings (Use Class E) to be converted to residential use (Use Class C3) without full planning permission, subject to prior approval. Most development lenders treat prior-approved Class MA schemes similarly to fully permitted projects, making finance more accessible and faster to arrange than for schemes requiring full planning.
Can I get conversion finance for a barn or agricultural building?
Yes, though barn conversions are treated differently from commercial conversions. Class Q permitted development rights allow some agricultural buildings to convert to homes, but lenders apply more scrutiny to rural locations due to thinner comparable sales data. Loan-to-cost ratios are typically 5–10% lower than urban schemes, and lenders often require pre-sales or lettings evidence.
How is the end value (GDV) calculated for a conversion?
The GDV is assessed by an independent RICS-registered valuer based on comparable residential sales in the area for units of equivalent specification. Lenders will typically instruct their own valuer and apply a haircut of 5–10% to the proposed sales prices in the appraisal. The LTGDV limit of 65% is applied to this independently assessed GDV.
Are there additional costs I should budget for in a conversion project?
Beyond build costs, conversions typically involve structural surveys, asbestos removal in older commercial buildings, Section 106 affordable housing contributions (where applicable), connection charges for new utility supplies, and VAT on professional fees. Where VAT recovery at 5% applies on the build costs, this can represent a meaningful saving — a specialist property accountant should be consulted early.
What happens if planning permission is refused after I have taken out a loan?
If you have drawn funds under a conversion facility and planning or prior approval is refused on appeal, the lender will work with you on an exit strategy — typically either selling the property in its current commercial use or reapplying with an amended scheme. Having a fallback value (the existing use value) well above the loan balance is important and is assessed at application. This is why lenders prefer prior approval to be confirmed before drawing funds.

Related project types

Refurbishment Finance HMO Development

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