Permitted development finance for Class MA, Class Q and other PD conversions
Permitted development rights let you turn offices, shops and farm buildings into homes without full planning permission. Permitted development finance funds the purchase on day one and 100% of the conversion works as you go, in one facility.
Rates from 0.75% a month, up to 80% LTV on day one, £100,000 to £15 million. Most cases complete in 10 to 15 working days once prior approval is in hand.
On this page
The short version
- PD finance funds the purchase plus 100% of the conversion works, released in stages as the work is done.
- Class MA (commercial to residential) is the main route, and the 2024 changes opened it up to larger and occupied buildings.
- Rates from 0.75% a month with prior approval granted. Most cases price between 0.85% and 1.15%.
- Up to 80% LTV on day one, with total debt capped at 70% to 75% of GDV. The GDV cap is usually the real limit.
- Prior approval in hand gets the best terms. Pending is still fundable at a lower LTV. Article 4 means full planning instead.
- First-time developers are considered, typically at 70% to 75% LTV.
What is permitted development finance?
Permitted development finance is short-term lending to buy and convert a building under permitted development rights, without full planning permission for the change of use. The lender advances against the building's current value on day one, then releases 100% of the conversion costs in stages as the work progresses.
Plenty of offices, shops and farm buildings are worth more as homes. Permitted development rights let you make that change without a full planning application, as long as you get prior approval. The difficulty is funding it: a mortgage lender won't touch a building mid-conversion, and you don't want to fund the works from your own cash.
PD finance solves that in one facility. It pays for the purchase (or releases equity if you already own the building), funds the works in stages, rolls up the interest so there's nothing to pay monthly, and is repaid when you sell or refinance the finished flats.
The building already exists. Lenders treat a conversion as a heavy refurbishment, not a new build, so the construction risk is lower. That usually means better LTV, lower rates and faster completion than a ground-up scheme. Permitted development doesn't mean permission-free, though. You'll still need prior approval in most cases, and an Article 4 Direction can remove PD rights altogether.
Class MA finance: commercial to residential
Class MA is the main permitted development route and the one lenders know best. It lets you convert buildings in Class E use (offices, shops, cafés, gyms, light industrial and similar) into homes, subject to prior approval.
Class MA
Commercial, business and service (Class E) to residential. The widest lender panel and the best terms.
Up to 80% LTV, from 0.75% pmClass Q
Agricultural buildings to residential. A specialist lender panel, with the rural location and structure in focus.
65% to 70% LTV, from 0.85% pmHMO, Part 20 and others
HMO conversions, upward extensions and other PD classes. Each has its own criteria.
65% to 80% LTV, from 0.80% pmWhat changed for Class MA in 2024
Two changes in 2024 widened the range of buildings that qualify, and lending on Class MA has grown since.
Floorspace cap removed
The old 1,500 sqm limit has gone. Larger town-centre office blocks and multi-storey retail buildings can now convert under Class MA instead of needing full planning.
Vacancy requirement removed
Buildings no longer need to have been empty for three months before you apply for prior approval. You can buy an occupied building and apply straight away.
If you were told a building was too big, or not empty long enough, it's worth checking again under the current rules.
What lenders want to see on Class MA
- Prior approval granted, ideally without onerous conditions
- No Article 4 Direction covering Class MA in that area
- A clear conversion specification and a credible contractor
- Strong residential comparables and an agent's view on values
- A realistic sale or refinance exit
How permitted development finance is structured
Two parts: a day-one advance against the building's current value, and a works facility that pays for the conversion in stages.
Day-one advance
Up to 80% of current market value, to fund the purchase or release equity from a building you own.
Staged works drawdowns
100% of the conversion costs, released as each stage is completed and signed off by a monitoring surveyor or inspection.
Sale or refinance
Flats sold one by one or as a block, or let and refinanced onto buy-to-let or term debt. The lender is repaid from the proceeds.
Total debt (day-one advance, works and rolled interest) is capped at 70% to 75% of the gross development value. On most schemes that bites before the 80% LTV does. The bigger the uplift from purchase price to finished value, the more room you have.
Interest
Usually rolled up or retained during the works, so there are no monthly payments while you're converting.
Monitoring surveyor
Most lenders use one to sign off each drawdown. On smaller, simpler Class MA schemes some lenders don't, which saves cost and time.
Term
Typically 12 to 24 months. A simple office floor might take 6 to 9 months to convert, and a larger scheme 18. Plan for a realistic programme.
PD bridging loan or development finance?
Most PD conversions are funded as a bridging loan on a heavy refurbishment basis, not as development finance. Keeping the existing structure points to a bridge. Major structural work or new-build elements point to development finance.
| PD bridging loan | Development finance | |
|---|---|---|
| Best for | Standard conversions with the structure intact | Major structural work or new-build elements |
| Rates | From 0.75% pm | From 0.90% pm |
| Day-one advance | Up to 80% of current value | 60% to 70% of site or building value |
| Works | 100%, in stages | Up to 100% of costs, in stages |
| GDV cap | 70% to 75% | 60% to 70%, up to 75% with stretched senior |
| Monitoring surveyor | Often, but sometimes avoidable on small schemes | Almost always, at every drawdown |
| Underwriting | Faster, treated as heavy refurbishment | Slower, with a full development appraisal |
| Lenders | Wider, most bridging lenders with PD experience | Narrower, dedicated development lenders |
An office conversion that keeps the frame and replaces the inside suits a bridge. One that adds new floors, changes the floor plates or knocks parts down is usually better as development finance. We'll tell you which fits at the feasibility stage.
Permitted development finance rates and LTVs in 2026
Rates start from 0.75% a month on Class MA with prior approval granted. Most cases price between 0.85% and 1.15% a month, depending on the PD class, prior approval status, LTV, lender and how complex the scheme is.
| Conversion | Rate | Day-one LTV | Max LTGDV | Notes |
|---|---|---|---|---|
| Class MA, prior approval granted | From 0.75% pm | Up to 80% | 70% to 75% | Best pricing and widest panel |
| Class MA, prior approval pending | From 0.90% pm | Up to 75% | 70% | Some lenders decline before approval |
| HMO conversion | From 0.80% pm | Up to 80% | 70% to 75% | Depends on licensing and Article 4 in the area |
| Class Q, agricultural | From 0.85% pm | 65% to 70% | 65% to 70% | Specialist lenders. Location and structure matter most |
| Part 20, upward extension | From 0.90% pm | Up to 65% | 65% to 70% | Needs an engineer's sign-off on the existing structure |
| Other PD routes | From 0.85% pm | Up to 70% | 65% to 70% | Case by case. Location and saleability are critical |
Arrangement fees from 1%, typically 1.5% to 2% of the facility. No upfront broker fee. Every case is priced individually.
Test your scheme
Enter the value, works and GDV. You'll see the day-one advance, the works facility and whether it fits the GDV cap.
Prior approval: how it affects your finance
Most PD rights, including Class MA and Class Q, need prior approval from the council before works start. It isn't full planning. The council looks at a narrower list, such as transport, flooding, contamination and, for Class MA, natural light. But your prior approval status changes which lenders will fund you, how much and at what rate.
Granted
The best position. The planning risk is gone, so you get the widest panel, the best pricing and the highest LTV.
Up to 80% LTV, from 0.75% pmPending
Still fundable. Some lenders will lend before approval at a lower LTV and a higher rate. Allow for the 56-day decision period in your timeline.
Up to 75% LTV, from 0.90% pmGranted with conditions
Read them carefully. Conditions on materials, noise or landscaping that change the spec or programme should be shared with the lender at the start.
Refused
Rare on Class MA, but it happens, usually on transport or natural light. The conversion then needs full planning, which is a different proposition for lenders.
The council must decide a Class MA prior approval within 56 days of validation. If it doesn't, approval is deemed granted. It's a useful backstop, but don't plan around it. Councils often issue late decisions anyway, and a deemed grant can be challenged.
Article 4 Directions: when PD rights don't apply
An Article 4 Direction is a council decision that removes permitted development rights in a specific area. If your building is covered for the relevant PD class, it isn't a PD project any more and needs full planning permission.
What it means for your finance
- A longer timeline
- Planning risk the lender has to price
- A different, narrower lender panel
- Usually a lower LTV until planning is granted
What we do about it
- Check Article 4 coverage at feasibility on every enquiry
- Arrange a planning bridge while full permission is sought
- Or restructure the deal as a planning-led scheme
Several London boroughs have Article 4 Directions covering Class MA, including parts of the City of London, Camden and Islington, and a number of other cities and town centres have followed. Always check with the council before assuming a building qualifies.
Class Q and other PD routes
Class Q: agricultural buildings to homes
Class Q is the main route for barn and farm building conversions, up to 10 homes, subject to prior approval. It's fundable, but with fewer lenders than Class MA.
What lenders look at
- The building's structure: it must convert without a wholesale rebuild
- How remote it is, and how that affects resale
- Prior approval granted
- The quality of the finished homes against local comparables
Class Q limits
- Up to 10 homes
- The building must have been in agricultural use
- The works can't amount to a new build
- Schemes pushing structural limits may suit development finance better
A Class MA lender is looking at an urban building with plenty of residential comparables. A Class Q lender is looking at a rural barn where the housing market can be thin. The conversion isn't harder. The exit is less certain, which is why Class Q gets 65% to 70% LTV from 0.85% a month.
HMOs, upward extensions and other classes
HMO conversions depend on licensing and whether the area has an Article 4 Direction on HMOs. Part 20 upward extensions need an engineer to confirm the existing building can take the load. Class G (flats above shops) and other PD routes are assessed case by case through specialist lenders.
Can first-time developers get PD finance?
Yes. A PD conversion is one of the more accessible first projects. The shell already exists, the programme is shorter and the planning route is simpler. Track record still matters, but less than on a new build.
What lenders weigh most
- The building, its location and comparables
- Prior approval status
- A credible spec and contractor
- A realistic, evidenced exit
- Your ability to cover overruns
How to strengthen your case
- Prepare a full information pack first
- Get a credible contractor on board early
- Get an agent's letter on end values
- Show the exit clearly
- Expect to give a personal guarantee
Typically 70% to 75% on a first scheme, against 80% for developers with a track record on Class MA. One completed scheme makes a real difference to what you can borrow next time.
Exit strategies for PD finance
Lenders want a credible, timed exit from day one.
| Exit | What it looks like | What lenders want to see |
|---|---|---|
| Open market sales | Flats sold one by one through agents. The most common exit on smaller Class MA schemes | Comparables, an agent's letter, realistic prices and sale timescales |
| Block sale | Most or all units sold to one investor, housing association or developer | Buyer interest, heads of terms or the reasoning behind any discount |
| Buy-to-let refinance | Flats let and refinanced onto BTL mortgages or a portfolio loan | Expected rents, the likely BTL lender and whether the numbers stack |
| Mixed | Some sold, some kept and let | A clear plan for both and how partial repayments work |
Need more time to sell once the works are done? A development exit bridge can repay the conversion loan.
How to apply for PD finance
Most cases complete in 10 to 15 working days from a full application, once prior approval is in hand. Come to us early and the move from approval to funded works is much smoother.
Feasibility and lender fit
We look at the building, the PD class, prior approval, Article 4, the LTV you need, the spec and the exit, and give you indicative terms before you spend anything.
Decision in principle
Usually within 24 hours of a full pack. We instruct the lender and confirm the valuation route and solicitors.
Valuation, legals and monitoring surveyor
Title reviewed, prior approval and conditions checked. Most delays happen at the legal stage, so flag title issues early.
Completion and works start
The day-one advance is released and works begin. Each drawdown follows sign-off, with interest rolled or retained.
Works finish and exit
Building control sign-off, then sale, letting or refinance. The lender is repaid from the proceeds.
Case study: Class MA office conversion, Leyton E10
Office to six flats, East London
A developer bought a first-floor office suite in Leyton with Class MA prior approval for six flats. The existing lender wouldn't fund the works. We placed a single facility: a 78% day-one advance to refinance the purchase, plus 100% of the works in three stages covering strip-out, layout, kitchens, bathrooms and M&E. Four flats sold within 90 days of completion, and the other two were refinanced onto buy-to-let mortgages.
£1.2m facility, 78% LTV, 0.89% pm, 14 daysPermitted development finance FAQs
What is permitted development finance?
Short-term lending to buy and convert a building under permitted development rights, without full planning permission. It funds the purchase on day one and 100% of the conversion works in stages. It's most often used for Class MA commercial-to-residential conversions, and also for Class Q barns, HMOs and upward extensions.
How does Class MA finance work?
The lender advances up to 80% of the building's current value on day one, then releases 100% of the conversion costs as each stage is signed off. Interest is rolled up, so there are no monthly payments. Total debt is capped at 70% to 75% of the finished value, and the loan is repaid by selling or refinancing the flats. Rates start from 0.75% a month with prior approval granted.
What LTV can I get on a PD conversion?
Up to 80% of current value on day one for strong Class MA cases with prior approval. The real limit is usually the GDV cap: total debt, including works and interest, of 70% to 75% of the finished value. Class Q gets 65% to 70%, upward extensions up to 65%, and first-time developers typically 70% to 75%.
Do I need prior approval before I can get finance?
Not always, but it makes a big difference. Some lenders will lend before approval at up to 75% LTV from 0.90% a month. With approval granted you get up to 80% from 0.75%, and far more lenders. Councils have 56 days to decide a Class MA application.
What is the difference between PD bridging and development finance?
A PD bridge treats the conversion as a heavy refurbishment. It's faster, with up to 80% on day one, rates from 0.75% and a wider lender panel. Development finance suits schemes with major structural work or new-build elements, with a lower day-one advance of 60% to 70%, rates from 0.90% and a monitoring surveyor at every stage. Most standard conversions suit a bridge.
How do Article 4 Directions affect PD finance?
An Article 4 Direction removes PD rights in an area, so the conversion needs full planning instead. That means a longer timeline, planning risk, fewer lenders and usually a lower LTV until planning is granted. Several London boroughs have one covering Class MA. We check Article 4 on every enquiry.
Can first-time developers get PD finance?
Yes. Conversions are one of the more accessible first projects because the shell already exists. Lenders focus on the building, prior approval, the spec and contractor, and the exit. Expect 70% to 75% LTV rather than 80%, and a personal guarantee.
What are typical rates for permitted development finance?
From 0.75% a month on Class MA with prior approval granted. Most cases price between 0.85% and 1.15% a month. Pending approval starts from 0.90%, and Class Q from 0.85%. Arrangement fees run from 1%, typically 1.5% to 2%.
What changed for Class MA in 2024?
The 1,500 sqm floorspace cap was removed, so larger buildings now qualify, and the requirement for the building to have been empty for three months before applying was dropped. Both changes widened the range of buildings that can convert under Class MA.
Does PD finance cover 100% of the works?
Yes. The works facility funds 100% of the conversion costs in stages. The total of the day-one advance, works and rolled interest must stay within 70% to 75% of GDV, which a scheme with a good uplift will usually manage.
Can I get finance for a Class Q barn conversion?
Yes, through specialist lenders, at 65% to 70% LTV from 0.85% a month. They focus on the building's structure, how rural it is, the quality of the finished homes and how believable the sale or refinance is.
Which permitted development rights can be financed?
Class MA (commercial to residential), Class Q (agricultural to residential), Class G (flats above shops), HMO conversions and Part 20 upward extensions, among others. Lender appetite varies a lot between them. A town-centre Class MA office and a remote Class Q barn are very different cases.
Who wrote this page
Harry Baker
Harry holds an MSc in Real Estate & Finance from the University of Reading. He arranges permitted development and conversion finance for developers across England, from single office floors to multi-unit Class MA schemes.
- Team transacted
- £500m+
- Lender panel
- 50+
How we compiled the figures
Rates, LTVs and GDV caps reflect PD cases placed through our lender panel and are reviewed monthly. Planning rules summarised here are general guidance. Always confirm the position on your building with the council or a planning consultant.
Related bridging products
Each product page has its own criteria and rates.
Fund your conversion from purchase to completion
Tell us the building, the PD class, your prior approval status and the works budget. We'll come back the same day with whether it works, which lenders fit and indicative terms, before you commit to any costs.
Your property may be repossessed if you do not keep up repayments on a loan secured on it. Permitted development rights are subject to prior approval and Article 4 Directions, and this page is general guidance, not planning advice. Figures are indicative, based on our lender panel in October 2026, and subject to underwriting, valuation and legal checks. Aura Capital is a trading name of Chammosair Limited, registered in England & Wales, company no. 15786496. Aura Capital is a broker, not a lender, and is not authorised or regulated by the Financial Conduct Authority. We do not arrange regulated loans or give financial advice.