What is a refurbishment or permitted development deal pack?
A refurbishment or permitted development (PD) deal pack is the lender submission document set for a property finance deal where the borrower intends to improve, convert, or change the use of an existing property. It includes everything in a standard bridging pack, plus additional documentation specific to the planned works: the schedule of works, cost breakdowns, planning evidence, GDV justification, and a works-specific exit strategy.
Refurbishment deals cover a range of project types — from light cosmetic upgrades to heavy structural renovations. Permitted development deals are a specific subset where the borrower is converting a property under permitted development rights (such as office-to-residential conversions under Class MA) rather than full planning permission.
Both deal types share a common characteristic: the lender is lending against a property that will be worth more after the works are completed. That means the lender needs to assess not just the current value and the borrower’s creditworthiness, but the viability of the works plan, the accuracy of the cost estimates, and the credibility of the projected end value.
How does a refurbishment deal pack differ from a standard bridging pack?
A standard bridging pack demonstrates that the borrower can service the debt and exit on time, secured against a property at its current value. A refurbishment deal pack must demonstrate all of that, plus prove that the proposed works are viable, properly costed, and will deliver the projected uplift in value.
The additional requirements fall into five categories.
Schedule of works. A detailed, itemised breakdown of every element of the refurbishment. Not a summary — a line-by-line schedule showing each task, its estimated cost, its duration, and its sequencing. The lender uses this to assess whether the budget is realistic and whether the timeline is achievable. A vague schedule signals that the borrower has not properly planned the project.
Cost breakdown with contingency. The total project cost, broken down by category: construction, professional fees, statutory costs, and contingency. The contingency should be realistic — typically 10-15% for a standard refurbishment, potentially higher for older properties or complex conversions. A budget with no contingency tells the lender that the borrower has not accounted for overruns.
GDV justification. The gross development value is the projected value of the property after works are completed. This is what the lender uses to calculate LTGDV and assess the exit. The GDV must be supported by evidence: comparable sales in the area, a valuer’s assessment, or both. A GDV figure without supporting comparables is an opinion, not evidence.
Contractor or project management details. Who is carrying out the works? Are they an experienced contractor with a track record on similar projects? Is there a project manager appointed? For heavier refurbishments, lenders may require evidence of contractor qualifications, insurance, and previous completed projects. For light refurbishments, the borrower may be managing the works directly, but the lender still wants to know the plan.
Works-specific exit strategy. The exit must account for the works timeline. If the borrower plans to refinance after completion, the exit date must allow for works completion plus time for a post-works valuation plus time for the refinance application. If the exit is sale, the timeline must account for marketing and conveyancing after completion. Tight exit timelines on refurbishment deals are a common reason for lender pushback.
What planning documentation does a permitted development deal pack require?
Permitted development deals require specific planning evidence that standard refurbishment packs do not.
Prior approval certificate or confirmation of PD rights. The borrower must demonstrate that the intended conversion falls within permitted development rights. For Class MA conversions (commercial to residential), this requires a prior approval application to the local planning authority. The pack should include either the prior approval certificate or evidence that the application has been submitted and is progressing.
Confirmation of use class. The current use of the property must be confirmed. If the property is being converted from office (Class E) to residential (Class C3), the pack must evidence the current use class. This is typically confirmed via the business rates listing, the planning history, or a statutory declaration.
Compliance with PD conditions. Permitted development rights come with conditions: maximum floor area limits, vacancy requirements, flood risk assessments, transport and highways assessments, contamination assessments, and natural light requirements. The pack should confirm that each relevant condition has been assessed and addressed.
Prior approval decision notice. If prior approval has been granted, include the decision notice with any conditions attached. If conditions require discharge before works commence, document the status of each condition.
Not including this planning evidence is a common failure on PD deals. The broker assumes PD means “no planning needed.” It does not. It means a different planning process, and the lender needs evidence that the process has been followed.
How do exit strategies differ for refurbishment versus permitted development deals?
The exit strategy for a refurbishment deal is typically refinance onto a term mortgage at the post-works value, or sale of the completed property. The lender assesses whether the projected post-works value supports the refinance or whether the sales market supports disposal at the target price.
For permitted development conversions, the exit strategy often involves creating multiple units from a single commercial property — for example, converting an office building into six residential flats. The exit may be disposal of individual units, refinance of the entire block onto a buy-to-let portfolio product, or a combination of both.
The lender assesses PD exits differently because they involve a change of use. The post-conversion value depends on residential demand in the area, which may differ significantly from commercial values. The pack should include residential comparables, not just a valuer’s opinion. If the exit is unit-by-unit sale, the pack should include a realistic disposal timeline — selling six flats in a secondary location takes longer than selling one house in a prime area.
For both deal types, the exit must account for the construction risk period. Works overrun. Costs exceed budget. Completion dates slip. The exit strategy should include a buffer for delays and a fallback plan if the primary exit is not achievable on the original timeline.
What common mistakes do brokers make when packaging refurbishment or PD deals?
Underestimating the schedule of works detail required. “Kitchen and bathroom refurbishment throughout” is not a schedule of works. The lender needs to see individual rooms, individual tasks, individual costs. The level of detail signals whether the project has been properly planned.
Submitting GDV without comparables. The GDV figure must be evidenced. Comparable properties that have recently sold in the same area, at a similar specification, provide the evidence. A GDV that relies solely on the borrower’s optimism will be challenged.
Ignoring the PD conditions. Permitted development rights are not unconditional. Brokers who submit PD deal packs without addressing the specific conditions applicable to their conversion class will face queries that delay the deal by weeks.
Tight exit timelines that ignore construction risk. A twelve-month bridging facility for a project with an eight-month build programme leaves no margin for overruns, post-works valuation, and refinance or sale. Lenders see this and either decline or impose conditions that increase the borrower’s cost.
No contingency in the budget. Every experienced lender knows that refurbishment costs overrun. A budget with no contingency tells the lender that the borrower is either inexperienced or optimistic. Neither is reassuring.