How planning routes affect your mortgage options

Here at TerraQuest, the operators of the Planning Portal, we pride ourselves on partnering with companies that bring real value to our customers. This week, we’ve teamed up with Mayflower, welcoming them as our guest contributor to share valuable tips and insights for self-builders.

Not every dream home starts with a shovel in the ground. For thousands of Self Builders, it begins with a tired bungalow or an outbuilding with untapped promise. Whilst planning permission is an important part of this puzzle, it’s often your funding strategy that determines whether a conversion progresses smoothly or not. So we, Mayflower Mortgage, are here to tell you what most leave out.

‍Class Q conversions

Class Q is one of the most misunderstood planning tools in UK self build and conversion finance. It offers a way to convert certain agricultural buildings into homes without applying for full planning. But if you’re relying on Class Q, lenders won’t just look at whether the permission exists, they’ll also look into how strong and stable that permission is.

Ultimately, they’ll want assurance that the project is both deliverable and mortgageable on completion. This means you might need to cover:

· Structural viability. Even if your Class Q was granted without a structural survey, lenders might require one to confirm that the existing building can take the proposed works without the addition of any new load-bearing elements.

· Site access and services. It will do no harm to prove that the plot can be reached legally and that mains water or electricity is viable. If you’ll be in need of alternative systems like treatment plans, you’ll need to prove these are factored into the costings.

· Conversion route and materials. Some lenders will draw a hard line if the project edges towards a full demolish and rebuild plan, so you’ll need to define and defend your strategy clearly.

‍Permitted Development Rights (PDR)

These are also often assumed to be a way to sidestep full planning and get that extension or conversion signed off faster. But from a mortgage perspective, a lack of formal planning approval can create its own challenges.

Most people know they should get a Lawful Development Certificate, but not having this could derail your finance application just days before completion. It’s your responsibility to prove the works are compliant. We recommend bridging the gap by:

· Confirming your planning status with formal certification. A Lawful Development Certificate (LDC) isn’t required by law, but many lenders do see it as essential. It provides written proof that your project qualifies under PDR and gives valuers something concrete to reference.

· Link your PDF to value uplift. If you’re borrowing against the projected end value (the most common route), this helps to show lenders that the value is realistic.

· Factor in buildability and lender appetite. Different projects will have different risks attached, so it’s best to map your plans to the most suitable product and get underwriter input where needed.

‍Assessing risk

There’s a lot of scaremongering involved in planning risk and project list, but after seeing thousands of applications, we understand how lenders assess risk and what they might perceive as a red flag.

Naturally, Self Build homes and conversions carry a different risk profile than traditional housing. There’s more chance of unexpected things arriving during the build and more risk of variation in the final valuation. So lenders factor all this in when pricing your deal or deciding whether to offer one.

Most things they look for are questions you can plan response to in advance:

· Planning certainty. If you’ve got full permission with all conditions discharged, that’s typically a green light. Any caveats can be a higher perceived risk, so you’ll need to document this clearly, and where necessary, front load your application with any expert reports.

· Clarity on your build scope. A fully quantified Schedule of Works should be a no-brainer (we provide all our customers with one for FREE!). This is a detailed cost plan that shows exactly what’s included, when, and how it will be funded. Lenders won’t want to see any vague plans or open ended schedules.

· A clear exit mortgage rate. Lenders will want evidence that the end product will qualify for a mainstream mortgage. This can mean checking lender criteria in advance of starting, especially if you’re using any unconventional materials or layouts.

‍Finance starts long before your build does

If you’re planning a conversion or renovation, one of the most important things you can do is prefect the way you present it to your lender. And we’ve designed our Self Build Mortgage, Conversion Mortgage, and Renovation Mortgage offers to include all the support you’ll need to present your project in the best way possible.

‍When you work with Mayflower, we’ll help you:

· Analyse any planning documents upfront, so we can identify any lender red flags.

· Build a costed, staged, drawdown schedule to show lenders what will happen when, and importantly how we’ll be managing any potential risks.

· Support your re-mortgage once the project is complete to help you move onto a better rate.

So whatever planning permissions you’re looking for, we’re here to create a financial plan for you. Book a free call with our expert team to talk through your project and see what’s possible.