Barn conversions have their own rhythm. They tend to attract borrowers who are patient, detail-oriented, and have usually spent a year or more getting to the point where they are actually ready to build. They also tend to attract lenders who proceed with caution, because the security is unconventional, the build process is complex, and the comparable sales evidence is thin.
Our clients in this case were a couple who had purchased a derelict stone agricultural barn near Clitheroe in the Ribble Valley. Planning permission had been granted for change of use and conversion to a four-bedroom dwelling. They had a specialist architect, a builder with barn conversion experience, and a detailed schedule of works. What they did not have was finance.
Their high street bank had declined after the valuer raised concerns about the lack of local comparables and the complexity of the build. Two specialist lenders had also passed. We were the third broker they had spoken to.
What made this case difficult
Barn conversions present a specific set of challenges for lenders:
- The existing structure is not a habitable building, which affects the starting security value
- Comparable sales of similar properties in rural Lancashire are limited, making the GDV harder to support
- Build costs for stone structures with heritage features are harder to control and more prone to overrun
- Planning conditions for barn conversions often restrict use, which can affect future marketability
That said, the Ribble Valley is one of the most sought-after rural areas in the North West, and high-quality barn conversions there command a significant premium. The numbers, on the right lender's assessment, worked well.
Project at a glance
| Property | Derelict agricultural barn, near Clitheroe, Lancashire |
| Proposed use | Four-bedroom residential dwelling (conversion) |
| Land and structure value | £165,000 |
| GDV on completion | £875,000 |
| Build cost | £390,000 |
| Loan amount | £650,000 |
| LTGDV | 74.3% |
| Rate | 0.92% per month (rolled up) |
| Term | 24 months |
| Drawdown structure | 6 staged drawdowns |
| Exit | Sale or residential mortgage |
Finding the right lender
We needed a lender with genuine experience of rural conversion projects, not one that had a barn conversion tick-box on an underwriting form. After a couple of days of conversations with our lender panel, we identified a specialist development lender whose own case studies included several rural Lancashire and Yorkshire conversions. Their underwriter understood the Ribble Valley market and was comfortable with the GDV supported by the architect's comparable analysis.
The term sheet came back within five days at 0.92% per month on a 24-month term with six staged drawdowns. The rate reflected the complexity rather than any concern about the project itself.
The drawdown structure
Given the nature of barn conversion work, drawdowns were linked to specific structural and finishing milestones rather than the standard new-build stages. The monitoring surveyor and the lender agreed the following structure with our clients:
- Substructure and drainage complete
- External walls stabilised and roof structure complete
- Roof covering, windows and external doors installed
- First fix mechanical, electrical and plumbing
- Plastering and second fix
- Practical completion
This gave the lender the confidence to proceed and gave our clients a clear build programme to work to.
The outcome
The conversion completed after 20 months, four months ahead of the 24-month term. Our clients chose to sell rather than retain the property. It sold to a family relocating from Manchester for £860,000, slightly below the original GDV estimate but still a very strong outcome. The development loan was repaid in full and the project delivered a solid return on their investment.
If you are working on a rural conversion project in Lancashire or elsewhere in the North West and have struggled to find finance, we are worth speaking to. Rural and unconventional projects are something we genuinely understand.