Bridging finance for farms and rural property.

Agricultural bridging, explained

What lenders look for in rural property.

What counts as agricultural property

We group five kinds of property together: working farms, whether arable, livestock or mixed, with or without a farmhouse; equestrian property such as stables, livery yards and equestrian centres; bare agricultural land; barns and other farm buildings to be converted; and horticulture, including orchards, vineyards, nurseries and glasshouses. Each is a separate choice in the form above, because lenders treat them differently.

A home with a few acres and a paddock is usually treated as residential rather than agricultural. For that, choose Residential and "House with more than 1 acre of land" in the form.

How rural property is valued

Lenders lend against a RICS valuation, usually by a surveyor who specialises in rural property. The farmhouse, cottages, buildings and land are often valued separately, and many lenders will lend more against the houses than against the land. Some limit the number of acres they will take, or lend only against the house and a limited amount of land around it. Bare land usually gets a lower loan to value than land with buildings.

What the lender will ask about

• The acreage, how the land is used, and whether any of it is let, for example on a farm business tenancy.
• Any agricultural occupancy condition on the farmhouse or cottages, which restricts who can live there and lowers their value.
• Planning, if you plan to convert buildings or change how the land is used.
• Access, water supply, rights of way, and any environmental agreements or designations covering the land.
• For an equestrian or horticultural business, its trading accounts and your experience.
• How you will repay the loan: your exit.

How agricultural bridging loans are repaid

• Refinancing onto an agricultural or commercial mortgage, which can take longer to arrange than a bridging loan.
• Selling part of the land or buildings, for example lots you don't need after buying a whole farm.
• Selling the property, or the homes created by converting farm buildings.

Converting barns and farm buildings

In England, many agricultural buildings can be converted into homes under permitted development (Class Q) rather than a full planning application, although the council still has to give prior approval and there are limits on size and the number of homes. Bridging, often heavy refurbishment bridging, can fund the purchase and the works, then be repaid by selling the homes or refinancing once they are finished. Choose heavy refurbishment in the form above to compare these products.

A worked example

You agree to buy 40 acres of grazing land next to your farm for £400,000. It is sold by informal tender with a four-week completion date, too soon to arrange an agricultural mortgage. The lender values it at £400,000 and lends 60% of that: £240,000 for 12 months, with the interest retained. You put in the rest, and refinance onto an agricultural mortgage within the term.

These figures are only an illustration. The rate, fees and how much you can borrow depend on the lender and your circumstances.