Fiduciam’s Permitted Development Loan: a success story in Gloucester Docks

permitted development loan

Fiduciam is an established international lender of bridging loans, commercial mortgages and development finance. Property conversion finance, also often referred to as permitted development finance, is an important part of Fiduciam’s business.  It provides existing buildings with a new lease of life, often as residential real estate, thereby making the buildings much more energy efficient and at the same time avoiding the resource intensity of new ground-up developments. A recent successful transaction that has been fully redeemed was Brittania Warehouse a substantial permitted development loan in Gloucester Docks.

permitted development loan

The site was a previously listed disused grain warehouse in the county town of Gloucester. Having burnt down in the 1980s, it was rebuilt with a modern structural framework, yet in a traditional warehouse style, very much sympathetic to the Victorian surroundings of Gloucester Docks, Britain’s most inland port.  Being a recent building, it was no longer classed as listed, therefore able to benefit from Class O of permitted development rights. As a permitted development the property could with prior approval, but without making a planning application, change its use from commercial, offices, to residential.

The client was a repeat borrower with a good lending relationship with Fiduciam, and familiar with Fiduciam’s development finance. Lender-Borrower relationships are especially important to us, and we consequently have a large number of repeat borrowers for bridging loans, commercial mortgages, development finance and of course permitted development loans.

On this occasion the client sought a permitted development loan to acquire the property and undertake conversion works to provide 38 residential apartments. After completion, the apartments were to be rented out, to provide reasonably affordable rental accommodation which is very much in short supply in Gloucester. Fiduciam was able to provide a permitted development loan of £4,299,000 at a competitive monthly interest rate of 0.77%, for a term of 24 months and a loan to gross development value of 70%.

This permitted development loan for Brittania Warehouse was at the heart of an ongoing regeneration plan in Gloucester. Gloucester’s regeneration plan has been in place since the early 2000s and has seen an investment of around £700 million over the last decade. Gloucester Docks, a remarkably complete example of a Victorian port, specifically has seen major development projects of residential, retail, and commercial spaces, and has become a cultural destination with two museums and regular visits by tall ships, also resulting in increased sales and rental values.

The project was completed on time and to budget with all units being rented out within a month of marketing and refinanced before the permitted development loan expiration date.

Jake McCausland, Head of Development, commented “It is always an enjoyable experience working with repeat borrowers. We were thrilled to be able to finance this exciting, value-enhancing and sustainable project with a permitted development loan. We expect property conversion to rapidly grow in importance over the coming years considering the net zero strategies of the UK and other countries in which we lend.  Furthermore, converted buildings often have a charm which new buildings find hard to replicate.  Therefore, we look very much forward to financing an increasing amount of conversion projects by granting permitted development loans to both new and existing clients in the future.” The borrower added “It’s an absolute pleasure working with Fiduciam and such a refreshing change compared to other lenders.”