Photo by Wilson Finch Properties

Buying a property without planning permission can feel risky – especially when your strategy relies on a specific configuration or exit. Whether you’re looking at an HMO conversion, a semi-commercial opportunity, or a vacant commercial unit, not having the right planning in place can create uncertainty.

However, buying a property without planning permission doesn’t always mean walking away from the deal. With the right structure, a strong back-up option and the correct funding strategy, it can still be a viable and profitable move.

This month, I want to talk about what to do when a property doesn’t have the right planning permission for your plans. There are several possible approaches, and while some are easier to navigate than others, there are solutions available.

Create a Back-Up Option

This is probably the easiest solution. It works particularly well with conversions to large HMOs (when you’re not in an Article 4 area) and semi-commercial property that you ideally want to convert to residential.

What this means is that you have an ideal scenario (which requires planning), but also something that could work without any change of use. In the HMO example, this might look like a property that could work either as a large HMO (7 or more bedrooms) or as a 6-bedroom HMO. You will need to assess the refurbishment costs and rental income for both options and ensure that the deal works either way.

If the property is in an Article 4 area, then the back-up plan would need to be as a single let or holiday let, so that no planning is required.

Some clients carry out the works assuming they will get planning permission, and then use the extra space as a work-from-home office or cinema room if they don’t. In other scenarios, you can convert the property to a 6-bedroom HMO and then wait for planning to be approved before carrying out an additional extension or garage conversion, for example. What you do will depend on the layout of the property and the timescales required for each option.

We’ve also seen this approach work when converting flats to a house, a house to flats, or making existing HMOs larger (for example, converting from C4 to sui generis). The key is ensuring that you’re genuinely comfortable with the alternative. If you’re not, you’ll want more certainty before proceeding with the purchase.

A Favourable Pre-Application or Utilising Permitted Development

There are instances where a back-up option simply doesn’t work. This could be where the costs or rental potential don’t stack up, or where there isn’t a viable alternative at all. Examples include vacant commercial buildings or HMO conversions in Article 4 areas.

In this situation, buying yourself time to secure planning is often the best approach. This can be done through a conditional exchange or an agreement with the vendor. Where that isn’t possible, achieving a favourable pre-application outcome can be very helpful. It isn’t a guarantee, but it can provide enough confidence to proceed with a bridging loan.

If a similar nearby property has achieved planning, or there has been a previous application that has expired, this can significantly strengthen your case.

Permitted development (PD) is another option that works well in certain scenarios. A full planning application can take months, whereas PD approval typically takes around eight weeks. You may find there is something you can do under PD – even if it isn’t your ideal scenario and you can run both applications alongside each other. This offers an alternative route to acquiring the property while reducing your overall risk.

Use Alternative Funding

The final option is to avoid mortgage finance altogether. This won’t work for everyone, but if you have the cash available and are comfortable with the level of risk, it can be a solution.

Once planning is granted, we can then look at refurbishment finance and take advantage of the uplift in value that planning permission has created.

There are clearly risks involved with this approach, so thorough due diligence is essential. We’re also very happy to discuss potential exit routes before you commit to purchasing the property.

As always, we’re happy to chat through any specific deals you’re considering and talk through your options. You can book a call with me at any time here.

About the Author:

Ellie Broadhurst is a specialist mortgage broker working at Baya Financial in partnership with The HMO Roadmap. She works with HMO property investors throughout their journey, from clients starting on their first project through to experienced portfolio landlords and developers. Learn more about Ellie here.