The rising popularity of barn conversions is no surprise, given their lofty ceilings, spacious open-plan interiors, and picturesque countryside locations. If you’re thinking about purchasing a dilapidated barn and turning it into your ideal home, you might wonder how to secure the necessary financing.
Obtaining a mortgage for a barn conversion might be more involved than financing a standard property, but rest assured, there are numerous options. A range of specialist mortgage providers and products cater specifically to barn conversion projects.
In this article, we’ll thoroughly examine the world of mortgages for barn conversions, guiding you in acquiring the financing needed to make your dream come true.
What is a Barn Conversion?
A barn conversion refers to the process of transforming an agricultural structure into a functional space suitable for commercial or residential use.
These conversions are gaining popularity due to their charming rustic exteriors, captivating character, ample dimensions, tall ceilings, and prime locations, making barns ideal choices for either cosy homes or stylish office spaces.
You will have complete control over the layout of your new home, its style and usability.
Mortgages for Completed Barn Conversions
Ah, the allure of an already converted barn – situated amidst picturesque rural landscapes, they offer breathtaking views that truly capture the essence of countryside living.
And don’t think for a moment that these conversions lack the comforts of modern living.
They come equipped with contemporary finishes such as underfloor heating, mezzanine floors, and expansive glazed areas, seamlessly blending the rustic with the refined.
Now, what makes these conversions stand out?
Their exteriors alone are enough to impress, often showcasing double-height rooms, exposed beams, and vaulted ceilings.
To top it all off, open-plan living spaces create an airy and spacious atmosphere that perfectly complements the overall aesthetic.
But what should you know before purchasing a barn conversion?
Before taking the plunge, it’s crucial to do a bit of detective work.
Investigate when the property was converted, as this could greatly influence the building’s energy efficiency rating – and consequently, your heating bills.
Given their farming origins, it’s also essential to examine any covenants tied to the property, such as access rights across your land.
Keep in mind that neighbouring farmers might still retain these rights for their farm vehicles, which could affect your privacy and peace.
Barn Conversion: Key Steps and Considerations
Embarking on a barn conversion project requires thorough research before you can start exploring suitable lenders:
Planning Permission
Full planning permission may not always be necessary for converting a barn into a dwelling, thanks to the ‘permitted development rights’ introduced in 2014. However, you must submit a ‘prior notification’ to the relevant local authority before starting the project, and they could potentially refuse your proposal.
Planning permission may still be required if the project is considered a rebuild rather than a conversion or if the barn has listed status. Having an experienced architect for barn conversions can provide valuable guidance and expertise, as well as reassuring the lender.
Additional Consents
Barns are typically older structures situated on agricultural land and may not have direct vehicle access. Consider the following aspects, along with planning and prior notification requirements:
Deed Restrictions: Check for deed restrictions if the barn has existing planning permission. These could limit property extensions, building on specific plots, keeping livestock, or parking for certain vehicles.
Rights of Way Access: Seek permission from the local authority for any additional access requirements.
Listed Status: If the barn is listed, you must apply for ‘listed building consent’ from the local authority, in addition to planning permission. This may impose restrictions on materials and require preservation of certain original features.
Agricultural Restrictions: Ensure no agricultural restrictions apply to the barn or its land. Removing such restrictions can be complicated, lengthy, and expensive, with no guaranteed outcome.
Surveys
Allocate funds for a comprehensive building survey, which is essential for both building, converting or buying a pre-built barn conversion.
Budgeting
Unanticipated issues and expenses are common in such projects. Develop a clear financial plan, including a contingency fund, to ease your mind and assure lenders that you’ve considered potential challenges.
Resale Considerations
While many undertake barn conversion projects to create their dream home, life circumstances may change. In case you need to sell the property, location and build specifications are crucial. Research the demand for such properties in your area and aim for high-quality finishes and modern technology to maintain resale value.
Assessing the Costs of a Barn Conversion
The expenses associated with a barn conversion can vary significantly based on factors such as the barn’s size, layout, condition, your chosen builder, materials, necessary utilities, overall finish, and road access.
As with any renovation, it’s important to grasp the costs involved to determine the amount you’ll need to borrow.
Mortgage lenders will regularly review your work schedule and evaluate the realism of your budget. If your lender concludes that you’ve underestimated the costs, you may need to increase your loan or seek alternative financing options.
How much do barn conversions cost?
Although numerous factors can impact the cost of a barn conversion, here are some average costs to provide a rough guide:
| Type of Conversion | Cost + VAT (Range low – high) | Average Cost |
|---|---|---|
| Barn Conversion Cost | £150,000 – £400,000 | £275,000 |
| Barn Conversion Cost per Square Foot | £153 per square foot | |
| Barn Conversion Cost per Square Metre | £1,400 – £2,000 per square metre | £1,700 per square metre |
| Small Barn Conversion Cost | £150,000 – £200,000 | £175,000 |
| Steel Frame Barn Conversion Cost | £250,000 – £300,000 | £275,000 |
| Data source: Checkatrade.com 2023 |
Is It Possible to Obtain a Mortgage for a Barn Conversion?
The majority of mortgage lenders only grant mortgages for properties deemed habitable, complete with functional kitchens and bathrooms.
This excludes most renovation and non-traditional construction projects like barn conversions.
Non-traditional construction typically encompasses buildings made from unconventional materials such as timber frames, metal, glass, concrete, and pre-fabricated kits.
Mortgages tailored for barn conversions differ from standard mortgages, which release funds in a lump sum and require the property to be move-in ready upon submitting the mortgage application. These bespoke mortgages can fluctuate significantly depending on the project type and the extent of necessary renovations.
To renovate a dilapidated property or convert a non-residential structure like a barn, you’ll likely need to seek out a specialist mortgage lender.
Financing Options for Barn Conversions
For a niche home buying/building project like this, always seek expert advice from the beginning. A mortgage adviser with specialised knowledge in barn conversion and development finance can do more than just find the right funding for your project. They can guide you through every stage of the process and assist in presenting your plan of works to the lender.
Residential Mortgages
If the barn is already habitable, you could be eligible for a residential mortgage. However, securing mortgages for converted barns can be challenging, as lenders prefer properties built with traditional materials like brick. If your barn primarily consists of wood, obtaining a mortgage might be more difficult.
Bridging Loans
If the barn is currently uninhabitable, you may struggle to obtain a standard mortgage, which is designed for immediately move-in-ready properties. A bridging loan can provide the funds needed to purchase and convert the barn into a residential space. Upon completing the conversion, you can apply for a residential mortgage to repay the bridging loan.
Development Finance
For large-scale projects, such as demolishing the existing barn, multiple conversions, extensions, or major renovations, development finance may be an option.
This type of loan offers access to higher funding levels, making it ideal for developers. Borrowing limits typically depend on the project specifics and your circumstances, but you can generally borrow up to 100% of the build costs as long as the total value falls between 60 and 70% of the gross development value.
Keep in mind that costs like arrangement fees, interest, exit fees, and broker fees apply, and funds are released in stages to help minimise interest charges.
Self-Build Mortgages
While more commonly used for financing new constructions, self-build mortgages can also be suitable for extensive renovations or building most of your property from scratch.
This mortgage type allows you to plan your budget and anticipate when funds will become available to cover costs.
Funds from self-build mortgages are released at key stages:
- Barn Purchase
- Structural Renovation
- Eaves Height Completion
- Watertight Roof Installation
- Internal Fixtures and Fittings
Your lender will closely monitor each project phase, ensuring it meets their requirements before releasing additional funds.
A self-build barn conversion mortgage might not be suitable if you plan to sell the barn shortly after completion and just require short-term financing.
In this situation, a bridging/development loan would be more beneficial. However, you’ll need to provide an exit strategy from the bridging loan, which would be selling the completed barn conversion.
Planning Permission for Barn Conversions
You may not necessarily need full planning permission to embark on a barn conversion. The introduction of the Class Q planning classification in 2014 altered conversion planning rules.
Barns that fall under Class Q classification can benefit from specific development rights, allowing agricultural buildings to be transformed into residential properties without planning permission.
However, you’ll still need to notify the local authority before commencing any conversion work. If the local authority determines that your project fails to meet certain conditions, they may reject your barn conversion proposal.
Permitted development for your barn won’t be approved if:
- The barn is a listed building
- The barn is situated within an Area of Outstanding Natural Beauty (AONB)
- The barn isn’t on agricultural land but rather in a paddock or garden
Before granting Class Q permission, the following factors will also be considered:
- The impact on local habitat and wildlife
- Whether your planned barn conversion aligns with its surroundings
- If your planned conversion preserves the character of the original building
When is Full Planning Permission Necessary for a Barn Conversion?
If you plan to rebuild rather than convert the barn, you’ll likely need to apply for full planning permission. In this case, you’ll require a self-build mortgage instead of a barn conversion loan. Permitted development rights are only applicable to conversions, not full rebuilds. Your architect will be able to advise you on whether planning permission is needed.
Mortgage considerations
Unless you have expertise in barn conversion, it’s crucial to hire an architect, solicitor, and construction company with strong experience in this field.
In addition to identifying potential issues and delivering the best results, working with experienced professionals and tradespeople will be appreciated by most lenders, which can contribute to securing approval for a self-build mortgage or alternative development finance.
Mortgages for Barns with Agricultural Restrictions
Securing a mortgage for a barn with an agricultural restriction is unlikely to be successful. Removing agricultural restrictions or ties can be a time-consuming and costly process, with no guarantee of success.
Full Planning Permission for Barn Conversions
If your project involves rebuilding a barn rather than converting it, you’ll likely need full planning permission and a self-build mortgage instead of a barn conversion loan. Permitted development rights apply only to conversions, not full rebuilds. Consult your architect to determine whether planning permission is required.
Clear Right of Way
Mortgage lenders will require a clear right-of-way to the barn for barn conversion mortgages. Ensure your architect includes this in your plans before applying for a mortgage. Obtaining permission for changes to secure a clear right of way can significantly improve your chances of mortgage approval. Waiting for lender feedback and local authority approval can result in lengthy delays.
Mortgages for Listed Building Barn Conversions
Securing financing for barns which are also listed buildings can be challenging and time-consuming. Listed barns have specific rules governing permissible modifications. To convert a listed barn, you must apply for listed building consent from the local authority before applying for a mortgage, including architectural drawings to support your application.
Barn Conversion Mortgages with Bad Credit
Poor credit history can negatively impact your likelihood of being approved for a barn conversion mortgage. Speak with a mortgage broker at the earliest opportunity to find our your options.
Alternative Building Conversions
Besides barns, specialist lenders offer non-standard construction mortgages for various building conversion projects. These may include financing for the conversion of:
- Redundant pubs
- Churches and chapels
- Derelict barns and cowsheds
- Windmills
- Redundant garages
- Water towers
- Dis-used school buildings
Mortgages for these non-standard building renovations are similar to those for standard construction properties but are considered higher risk.
Selling Converted Barns: Factors to Consider
Before purchasing a barn for conversion, it’s a good idea to research the resale value of similar properties in the area to gauge potential profit or loss. This information can help you make a more informed decision when choosing a property.
The location significantly affects the demand and value of a barn conversion.
Your converted barn may sell more quickly and easily if:
- The surrounding area hasn’t experienced major changes, such as new housing developments
- The barn conversion is of high quality
- The property is well-maintained and features modern technology, such as heating and lighting systems
Barn Conversion Mortgages: Final Thoughts
Though barn conversions have become more popular, they still present certain risks for mortgage lenders. If you’re interested in purchasing a barn for conversion or buying a completed barn conversion, speak to an experienced independent mortgage broker about the process and financing options.
Respect Mortgages work with an award winning broker who has access to a range of specialist mortgage products, including those suitable for barn conversions and purchasing a completed barn conversion.
