Raising finance on farmland to build a new home

A common problem that we come across when speaking to less experienced developers is the need for more finance to finish a project off due to unexpected costs.

For farmers who are developing land this can be an issue as often their main asset is the land they own. Many lenders will not secure finance on land alone unless it has planning permission and seperate title.

This was the case with a recent client who was building a house on his farm to sell on.

Well into the project an extra £150,000 was required to complete the build due to unforeseen costs.

The combined value of the land which had planning permission and the new home the farmer was building was £680,000.

The problem our client came up against was due to the fact the land did not have seperate title meaning lenders he approached were not interested in providing additional finance.

The good news is that there are lenders who are willing to overlook issues over land title where they can see a clear exit strategy.

In this case we managed to source finance for 12 months for the full amount required.

The client was able to finish the house build and sell it within the 12 month term making a healthy profit after repaying the loan.