Funding a land purchase is one of the most challenging tasks in UK property finance. Land is illiquid, difficult to value, carries planning risk, and generates no income — which makes mainstream lenders deeply uncomfortable with it. Yet for developers, acquiring the right site at the right price is often the single most important factor in a successful project. This guide explains how land purchase finance works in the UK, what lenders will and won't fund, and how to structure a deal that stacks up.
Standard mortgage lenders won't touch land — at least not without a house already on it. The reasons are fundamental: land has no rental income to service debt, its value is highly sensitive to planning outcomes, and in a forced sale scenario it can be almost impossible to achieve book value quickly. These characteristics push land finance firmly into the specialist lending market.
Specialist lenders who do fund land have developed underwriting frameworks that account for these risks. The advance is lower, the rate is higher, and the term is shorter than for conventional property finance. But the facility exists — and for developers who need to move quickly on a site acquisition, it can be the difference between securing a deal and losing it.
The most straightforward type. The land already has full or outline planning permission for a specific development. The planning risk has been removed, the development value is clear, and lenders are relatively comfortable. Advances of up to 65% LTV are available from mainstream development lenders, and rates are competitive.
Land without planning permission. The lender takes on planning risk alongside the market risk. Advances are lower — typically 50–55% of current agricultural or amenity land value — and rates are higher. The exit strategy must be credible: either planning is obtained and the land is refinanced onto a development loan, or the land is sold to another developer at a profit.
Sits between consented and speculative. Outline permission confirms the principle of development but not the details. Lenders will advance 55–60% LTV. The route to full planning must be clearly evidenced.
Agricultural land without development potential is available from agricultural lenders at 50–60% LTV, typically over longer terms. For land with potential for future change of use (greenfield sites on settlement boundaries, for example), specialist bridging or development lenders are more appropriate.
| Land Type | Max LTV | Typical Rate | Term |
|---|---|---|---|
| Full planning permission | 65% | 0.75%–1.0%/month | 6–18 months |
| Outline planning | 55%–60% | 0.85%–1.1%/month | 6–18 months |
| No planning (speculative) | 50%–55% | 0.95%–1.25%/month | 6–12 months |
| Agricultural (no dev potential) | 50% | Specialist lender | Term loan |
One of the most powerful structures in development finance is using land you already own (or are acquiring) as the equity contribution to a full development loan. Rather than contributing cash equity on top of the land purchase, the land value itself serves as your equity in the scheme. This is called a land-equity deal.
Example: you own a site valued at £1,000,000 with full planning for 8 houses. The total development cost (build + fees + finance) is £1,200,000. GDV is £3,000,000. A development lender advances at 65% LTGDV = £1,950,000 total facility. Land value of £1,000,000 + lender's £950,000 build facility covers total costs. Your cash equity requirement is minimal — the land does the work.
Tell us about the site, its planning status, and your development intentions. We'll identify which lenders will consider it and what terms are realistic — typically within 24 hours.
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