Buy-To-Let Mortgages Following Permitted Development

Permitted development rights have granted many opportunities to landlords and property developers, allowing you to carry out development and conversion work without the full hassle and delays associated with standard planning consent processes. 

When carrying out these works, it’s important to consider the end goal. Some projects carried out under permitted development can transform a building’s use class from commercial into residential, whilst others are more about expanding the property itself to offer more living space or specific facilities. 

Regardless of the exact nature of your project, when your works are completed your property’s value will increase – so any pre-existing finance is no longer suitable. To maximise the value of your investment, you can either refinance an existing deal or take out a new buy-to-let mortgage. 

Talk to Rangewell to get the most appropriate loan for your needs, with rates and terms suited to your long-term goals. We work with property developers and landlords across the UK to find and finance property projects of all shapes and sizes. 

BTL mortgages for newly converted properties

If you’ve just completed a development under PDR and now want to lease it as a residential let, a BTL mortgage might be the ideal choice. Securing a good mortgage offer means presenting lenders with a reliable investment opportunity that minimises risk – which may be difficult when you’ve finished development and have yet to tenant the property. 

One of the most important things to consider is whether you can find a lender that will recognise the long-term value of the new residential property, compared to the standard ‘bricks and mortar’ value. The former means you can raise a better loan because the property’s long-term rental income projects will be used as part of the overall valuation. 

You’ll need to put together a business plan that includes rental income projections in order to secure your loan. Lenders want to see evidence that your rental income will comfortably cover any potential mortgage repayments – which means typically requiring rental income to be 20-30% higher than the repayment. 

In standard BTL mortgages, most lenders offer interest-only plans which means you’ll only pay off the interest and need to repay the original loan at the end of the term. For PDR property, the loan type will depend on your current equity in the property and your goals for the future. Talk to Rangewell to find out whether an interest-only BTL is right for you, or whether an alternative option is more suited.          

Finance for commercial to residential PDR        

An appealing avenue for property investors is to purchase commercial property and convert for residential use under PDR. To carry out these projects in the first place, developers will usually take out a bridging loan or development finance that carries a heavy deposit. 

Once completed, however, your options open up considerably. In some cases you may own the completed property outright and simply need to spread the cost of your original development loan further, whereas in others, you’ll need to switch from your previous loan to a new long-term mortgage. 

Fortunately, refinancing can help you achieve either of these goals. 

Remortgaging from permitted development finance

If you’ve already taken out permitted development finance to carry out the project, it might be beneficial to spread the cost of your loan out across a longer period through refinancing. Rangewell can help you find a lender who will purchase your debt and offer a long-term BTL mortgage that allows you to make repayments over a number of years rather than the short timescale expected by a PDR loan. 

For residential conversions, this means you can start generating income from tenants without the initial pressure of making high repayments quickly. 

Remortgaging might also be an option if you already had an outstanding existing mortgage on the property before it was converted. Once completed, the property’s new value means your old mortgage will no longer suit. 

No matter what your property investment goals are or what your background is, there’s a lender to suit virtually any buy-to-let aspiration. Speak to Rangewell,  and we’ll talk through your existing goals and property details before finding a lender that can offer the rates and terms you need to enjoy a profitable journey as a buy-to-let landlord.