Mortgages With And Without Planning Permission

Whether or not planning permission is necessary or obtainable can be a deciding factor for many buyers looking to secure the right land or home for their building project.

In this article, we’ll look at what planning permission is, whether you’ll need it, and how the planning status of your new property can affect your ability to get a mortgage.

What is planning permission?

If you’re planning to build a new property, add to or significantly change an existing one, you’ll typically need to apply for planning permission. This is a certificate of permission from your local authority’s planning department to carry out the work. In most cases, building without permission is illegal, and the worst-case scenario would be having to destroy your creation.

There are two levels of planning permission, outline and full, and the type you’ll need will depend on the size and scope of the project. During the conveyancing process of your purchase, solicitors will check whether planning permission is in place or has been sought/granted in the past.

Is it always needed?

Not necessarily; however, you should always check before venturing beyond the planning stages of the build. To check whether or not you’ll need to apply for planning permission, visit the planning portal for more information.

Can you apply for planning permission before buying property or land?

You can, but with property, you’ll need to inform the current owner of your intention to do so. Although being granted planning permission may be the deciding vote for your purchase and save you time if you do go ahead, it’s important to note that the vendor is not obligated to wait for your permission to be granted and can sell to another buyer.

In this case, you likely won’t be reimbursed for the cost of the planning application.

It’s a bit easier with a plot of land, as you can purchase an ‘option’. An option allows you to lock in an agreed price so long as the purchase is completed by a certain date. This provides time to seek planning permission before you commit to buying the land.

Can you get a mortgage on a property without planning permission?

If you’re buying a house with additions, such as an extension or annexe, completed without planning permission, you may find it more difficult to get a mortgage. However, it will depend on when the building work took place.

Some lenders will lend in these circumstances; however, there may be a caveat, such as having to apply for retrospective permission, have a full survey carried out, put indemnity insurance in place and/or provide a larger deposit.

What about buying land without planning permission?

Land is not generally purchased using a mortgage unless you finance the entire project through a self-build mortgage. Even then, not all such home loans will include the provision to purchase land, and you may need to already own it.

As land without planning permission cannot be built on, you’re less likely to be approved for a mortgage than if you’re purchasing land with permission already in place. Finding a lender to help you may still be possible if you’ve made an application and are awaiting approval.

Can you get a mortgage for a house with an extension without planning permission?

It’s possible, yes, depending on the size of the extension. Smaller builds may fall within the permitted development rights regulations, in which case planning permission would not have been necessary. Lenders will then typically be guided by the advice of the property surveyor and may request a more substantial survey to ensure the structural integrity of the extension.

What is the 4-year rule?

If you’re buying a property with an extension completed without necessary planning permission, the completion date of the associated works is important. If the work was carried out more than 4 years ago, the planning department can no longer enforce the requirement for planning permission; therefore, it is no longer an issue. However, this may reduce the lenders available to you.

If the extension has been built within the past 4 years, you’ll need to obtain retrospective permission through a ‘lawful development certificate’. Suppose the current owner was responsible for the build. In that case, your solicitor will advise that they secure this certificate or apply for indemnity insurance on your behalf before the sale is complete.

How a broker can help you with mortgages and planning issues

A broker with experience in securing mortgages for borrowers who are looking to build or extend their own home will be well placed to recommend the right type of product for your needs, as well as which lenders will be most likely to approve your application.

Aside from knowing which lenders will expect existing planning permission to be in place before purchase and how long it needs to remain on said permission, they’re aware of lender preferences regarding building types. Self-build mortgages are a niche area of the market. Within that niche, some lenders may not accept an application if you intend to build certain property types, such as an annexe onto a terraced property.

This area of lending can, therefore, be fairly complex, and it’s highly recommended that you seek advice from a broker with the necessary experience and knowledge to help your purchase go smoothly. Get in touch today to be paired with one of the expert brokers we work with.

How do lenders view planning permission?

If you’re purchasing a home advertised as having the potential to expand ‘subject to planning permission’ (STTP), it means that planning permission is not yet in place. For a residential mortgage, this shouldn’t make too much of a difference, and the lender’s main concern will be whether the sale value is accurate, given that planning permission is not included.

When it comes to self-build mortgages, however, very few lenders will approve a loan unless existing planning permission is in place. You’ll also likely need a minimum period of 3-36 months remaining on the planning permission, depending on the lender.

Can you get a mortgage on a property or land that already has planning permission?

Although this might mean paying a higher purchase price, in the long run, this could save you a lot of time and effort. Any existing planning permission will transfer with the land or property you buy, so unless your intended use is very different from what the permission was granted, you can begin building immediately post-purchase.

Speak to a broker about getting a mortgage involving planning issues

If you’re looking to purchase property or land for a project requiring planning permission, a broker with expertise in this area can guide you through the entire process. They know which lenders will lend under which circumstances and can recommend alternative finance options where a mortgage is not currently viable.

Our broker matching service will put you in touch with one of the experts we work with who has specific experience in this area. Simply call now on 0330 818 7026 or make an enquiry.