Navigating a rural property development project in the UK requires a thorough understanding of planning regulations, environmental considerations, community engagement, and financial planning. Engaging with local authorities, consulting professionals, and staying updated on relevant laws and regulations is crucial for a successful and profitable project. Rural development can come with specific challenges and considerations that aren’t often found in urban and suburban settings. In this post, we’re going to explore some of these you need to be aware of before embarking on your next project.
Rural Property Development Considerations
There are several important considerations before you take out any rural development home loan, as they may affect the viability and profitability of your project.
Different or Stricter Planning Regulations
One of the main considerations for rural property development is the potential for different, sometimes stricter, planning rules. This is especially true if you live in a National Park, Area of Outstanding Natural Beauty (AONB), a conservation area or have tree preservation orders nearby.
You must conduct thorough research, and if necessary engage with experts, regarding your project. The additional time and costs associated with stricter planning will affect your budget, and your timelines, and ultimately could make your project unviable.
Environmental Impact and Biodiversity Net Gain (BNG)
Rural developments have a higher chance of having an environmental impact and being more affected by Biodiversity Net Gain legislation which came into effect in November 2023. In short, BNG legislation ensures that any development in the UK not only replaces the habitat and biodiversity that has been destroyed but adds 10%. This is calculated by the developer in conjunction with the local planning authority and uses a specific BNG metric. The habitat restoration can be done onsite, or the developer can purchase BNG units elsewhere to meet their obligations.
This can add significant costs, admin and time to your project, so it needs to be factored in at an early stage.
Drainage, Energy and Utilities
Depending on the site of your proposed development, there may be additional costs and planning associated with installing or upgrading utilities and drainage. If your chosen site has never been developed and is not near existing infrastructure, there could be significant costs involved. While this can be factored into any loan and budget, it will likely push up the overall cost of the development, requiring a higher asking price to ensure profitability. You may also have to consider the availability of high-speed internet in the area.
These factors may have an impact on planning as well, especially if you need to disturb natural habitats or cut across other people’s property. This brings us to our next point.
Access & Rights of Way
This is a consideration for all property developments, but in rural areas, special attention needs to be paid to access and rights of way. Whether this is footpaths across your land, access to potential neighbours’ properties, or agricultural access, it needs to be factored into any plans. You also need to factor in whether this is likely to affect the value of the completed development at the end of the project.
Rural Property Development Loan Requirements
If you’re applying for a rural land development loan then fundamentally, the process is the same as for anywhere else. The lender will broadly need to see the same things, and as long as they are happy that the project is viable and profitable, your rural property development loan should be approved.
These criteria include the following:
- The costs of purchasing the land (if required)
- Proof of planning permission and other related documentation
- The projected costs of construction, including legal and professional fees
- A detailed project plan with timescales for all elements of the build
- The projected value of the property once complete
- An exit plan – i.e. how you’re going to repay the loan
Our rural property development loan process is as follows:
Application: Contact us to apply for the loan. We’ll need the basic information surrounding the development at this stage to give you an initial decision. This includes details such as the location, development description, purchase price, build costs, planning status, and loan requirements.
Decision in Principle: We can usually give you a decision in principle within 24 hours. You’ll also receive our Ts & Cs as well as offer documentation.
Surveyor Instruction: If things proceed as planned, we’ll arrange for our surveyor to commence with the desktop study before visiting the site to produce a development viability appraisal. Once the report has been produced and reviewed, we will instruct our legal team.
Legal Instruction: Our legal team begins their processes and confirms that our 1st charge is secure. They will also produce a ‘Facility document’ outlining all terms and conditions of the loan.
Agreement & Funding: Once signed, our solicitor will transfer the initial tranche of funding to your legal team, who will then release funding to you. Subsequent drawdowns during the build will be sent directly to you.
We’re an independent lender of exit finance, pre-completion loans and bridging loans. We loan to both first-time and experienced property developers across the South of England including Hampshire, Sussex, Kent, Surrey, London, Berkshire and more.
