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£550,000 Property Finance secured - when the banks said ‘no’

Published on 24th August 2019 - Last update on 17th March 2020

Land and property are always going to be in short supply in the UK. This means that prices will be high - but, if a particular property is within your reach, it may well be an excellent investment. The competition for property, however, means that prices of versatile business property in good areas may continue their historic climb.

However, although residential property and established business premises are seen as exceptionally suitable for funding by lenders, there are some surprising exceptions. Land that has no buildings is seen as ‘unimproved’ and may be of surprisingly low value. Many lenders who are considered to be property specialists will not lend on land.

This caused a problem for an entrepreneur who wanted to acquire a caravan site in an attractive area of Cornwall. He had found land with easy access in an ideal location close to the coast that was already in use as a caravan site - but although he had a sound business case, he was unable to find a lender to help.

“The location - close to the north coast of Cornwall - is a favourite destination of caravanners. I had the site lined up, and informal discussions with the local council told me that there would be no problem with planning if I wanted to expand the existing business - in fact, the local authority was keen on bringing in extra tourists. But when I started looking at funding, I hit a brick wall.”

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The challenge

The site was large and had access roads already in place, and there were some areas of hardstanding which would be ideal for larger mobile homes. Services were already in place and the site had already been in use for camping for several years. The entrepreneur had estimated that he could have upwards of 120 caravans on site in the first year, and that his revenues would go up after he installed additional facilities during the closed season. But although his projections showed that his business had every chance of being profitable, he could not find the lending he needed.

He was happy to put in £500,000 of his own money, but he would need another £550,000 to secure the site. He approached all the high street banks, but none could help him. 

“To me, the land was a caravan site and the basis of a profitable business. To the banks, it was just a field.”

He came to Rangewell instead. 

Understanding the potential

Our finance experts understand the property lending market, and we know the challenges our new client faced.

The problem is that banks need to see security for a large loan, and that unimproved land is likely to be seen as of minimal value. Agricultural land is not expensive in many parts of the country.

The campsite was an established business and had basic amenities - but the shower block and clubhouse were basic, and did not meet the banks' standards for secured lending. 

How we helped

We saw that there were two challenges to overcome.

The first was the fact that the business was seen as a start-up. Business lenders can be reluctant to lend to any business which cannot demonstrate a long trading record.

The second was the status of the land as ‘unimproved’.

We believed that by approaching specialist property lenders we know who are sympathetic to the camping sector we could secure the funding required. 

We were able to secure the funding required at just 5.99%

Our client took possession of his site and has already started to look at funding for improvements which will make his second summer season even more rewarding than his first. 

“I was able to go ahead with the purchase, and have some cash left over which would go to setting up a shop and bar in the clubhouse. The site is already showing a small profit - now I am confident that I can turn that into a large one. “

We help people with business ideas find ways to put those ideas into practice. Loans, Land Purchase Finance, Asset Finance, Commercial Mortgages, or any other kind of finance - our expert teams find the most appropriate funding solutions while our network of lender contacts and our unique online tool let us find the most cost-effective rates.

Our service is independent, fast and absolutely free. Simply call us at Rangewell on 020 3637 4150 - or email [email protected]


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