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Who can help finance my project?
We have obtained full planning permission for a residential conversion on a timber frame barn that we originally built in 2004. The Building Regulations, design plans, SIP calculations, structural survey, and ecological surveys have all been done. The structural survey shows that as the barn is only 20 years old, and the timber frame, weatherboarding, roofing and tiles are also in excellent structural condition, the conversion is primarily more of an internal fit out rather than a full conversion. The barn is on our 20 acre private horse yard and we are currently living in a mobile home on site. The occupation of the barn, once completed, is limited to persons wholly, mainly, or lastly employed or working in the equestrian activities on the site.
We have been trying to obtain finance for this conversion. The estimating surveyors have very recently estimated the total build cost at £189,000 and the material costs at £89,000. The whole property is currently worth in the region of £850 - £900,000, with an estimated value after conversion of £1.2 - 1.5M. We approached Buildstore for finance, but were unsuccessful due to the size of the property. Ecology Building Society would only entertain a possibility if the barn was split and put under a separate title. We can't do this due to the planning condition tying the barn to the stables and land. We have tried the Agricultural Mortgage Corporation, The NFU, independent IFA's etc, but to no avail.
Is there a specific company that would be able to help us obtain finance to complete this project? We are only looking to borrow between £90,000 and £190,000, depending on affordability etc. We are more than happy and capable to undertake some of the work ourselves, and bring in trades as required.
One Answer
Hi Sean,
Thanks so much for getting in touch with your question. There are a two main issues, possibly three, in terms of raising a mortgage on your property that I can see from your question. One is the size of the plot, the second is the occupancy clause and the third is in relation to any commercial aspect of the site. We can look at these in turn:
Acreage: Many residential lenders have a maximum acreage they are able to lend on. This normally sits between 3-10 acres. Some lenders may be prepared to provide a loan despite their policy depending on the overall merits of the lending proposal. In your case, however, I believe this is complicated by point two below, and therefore makes any decision more complex.
Occupancy clause: Very few lenders are willing to lend on properties/land with occupancy clauses as they are concerned that in the event of needing to posses the property, their re-saleability options would be limited. The lenders that do lend on them tend to favour the looser clauses such as persons or relatives of persons who are, or ever have been working in agriculture. Your particular clause is more restrictive as it only applies to the equestrian business on the site.
The third possible issue is in relation to any commercial aspect on the site – ie if the horse yard is a business/generates income etc, it could be classed as commercial and therefore not be eligible for residential lending. I am unsure if this is the case for you, but the occupancy clause mentions employment etc.
With regards to how you move forward I would be happy to have a conversation with you (there is a lot more information that would be handy to know) to see if we can put a proposal together with the view to finding a lender who would be prepared to consider it. It may also help to revert to the council and confirm that you are not able to secure funding to build your house with the current occupancy agreement, they then may be able to amend it, perhaps with a mortgagee in possession clause, or remove it completely.
Rachel Pyne (Finance & Mortgages expert at Buildstore)