interbay

A shot in the arm for unregulated bridging



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From doctors’ surgeries, cafes and shops to gyms galleries and workshops, a huge range of commercial properties can now be converted into residential homes, thanks to the expansion of permitted development rights (PDRs).

The legislation introducing these new PDRs came into effect in August 2021, driven by both the desire to regenerate town centres and the government’s manifesto pledge to address the UK’s housing shortage. The stated aim is to get to 300,000 new homes a year by the mid-2020s, a pretty steep rise on the circa 216,000 new homes built in 2020/2021, according to the department for levelling up, housing and communities.

As many of you know, the ability to convert commercial space to residential is not a new thing. However, the new PDRs allow for a huge range of retail spaces (use class E) to be transformed into flats and houses, creating great opportunities for professional investors and developers.

Fortunately, there are also more funding options available in this area, including a full range of solutions from InterBay, which has entered the unregulated bridging market for the first time. InterBay can help developers with everything from light to heavy refurbs and single properties converting into residential HMOs of up to 10 bedrooms, to transformations of houses into up to six flats and commercial properties up to four. A developer exit scheme also covers individual properties worth £2m-plus and multi-unit schemes with 10 or more units valued at £5m or more.

As you know all too well, when it comes to bridging, speed of turnaround can be very important. As a benefit of being part of the OSB Group, all of InterBay’s bridging cases are underwritten by the hugely experienced team at Precise Mortgages, which first started servicing the UK’s bridging market in 2011 and have a deserved reputation for expertise and efficiency.

Efficiency, of course, is not the same as cutting corners. The new PDR legislation has caused concern, as it allows developers in some instances to carry out conversions without planning permission. Instead, applicants need to meet the requirements of a standard checklist. The fear is that such an approach could lower housing standards and accelerate the decline of the high street. In reality, many councils do impose their own restrictions (known as Article 4 directions) on proposed developments they don’t like the look of, and we may well see increased regulation in this area in future to preserve the balance of local areas when it comes to commercial buildings and shops.

Lenders have adopted varying stances on this issue. InterBay holds the line that full planning permission is the best guarantee of quality conversions, although we do offer the whole unregulated bridging range, down to light refurbs, which don’t need planning.

So whether your clients are looking to kit out a flat with a kitchen, turn a sweetshop into a students’ house, or transform a jewellery store into a BTL goldmine, you now have more options to offer them.

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