Bridging finance has long been used for refurbishments, but changes to planning laws have given it a new lease of life
There is often a lot of contention over planning laws but one recent amendment has been hugely positive: the ability for a developer to change the use of a property from office block to residential without the need for planning permission.
The Government originally put in a temporary measure to allow this, which was due to expire on 30 May. However, it was confirmed last October that the right would be put on a permanent footing.
As a result, there has been a big surge in the number of developers looking at refurbishment and change-of-use projects. This is bringing life back to town and city areas that had long been plagued by empty buildings.
The changes have been particularly beneficial in areas with a severe lack of residential space, providing much needed accommodation, often combined with a couple of retail units to help make the projects sustainable.
Bridging loans are much in demand for this type of activity. They offer the developer quick access to the funds, which enables them to start the project more rapidly and to get a return on their investment sooner.
Short-term bridging finance of up to a year has long been used for refurbishment projects, with the property either being sold at the end or refinanced with a longer-term loan. This change of planning laws has given it a new lease of life, however.
Using bridging loans also makes sense for the community, giving it access to more homes while changing the face of the neighbourhood.
Jonathan Sealey is chief executive of Hope Capital