How does planning affect finances?

    A short-term loan known as “planning gain finance” is used to finance a real estate transaction until planning gain is realised. These loans, which fall under the category of bridging loans, are secured by real estate.

    What is planning gain?

    Gain from planning is the result of requesting and receiving authorization to develop a piece of property or land.

    Property speculators utilise planning gain as a tactic to boost their profits. 

    How does it work?

    This kind of borrowing is intended to enable investors to buy locations, whether real estate or land, that have the possibility for planning approval.

    After purchasing the property, a planning application is subsequently made. The site will typically have improved in value once this is granted, at which point the borrower can either develop it or sell it at a profit.

    Finance is typically only utilised to support the planning phase. Development finance is typically utilised to finance the development project after permission has been given.  

    What is it used for?

    These facilities can be provided against nearly any security as long as it has the capacity to fund planning. They are intended to fund the planning process. Our bridging homepage has a more detailed explanation of bridging loans if you’d want to learn more about this sort of lending.