Glossary definition
Land Banking
The practice of acquiring and holding land for future development, often before planning permission has been secured, in anticipation of value appreciation. Land banking carries significant planning and market risk but can deliver substantial returns when sites achieve planning consent.
Definition
The practice of acquiring and holding land for future development, often before planning permission has been secured, in anticipation of value appreciation. Land banking carries significant planning and market risk but can deliver substantial returns when sites achieve planning consent. Bridging loans are commonly used to fund land banking acquisitions, with terms of 12–18 months allowing time for planning applications to be determined. Lenders will typically offer lower leverage on land-only deals, often capping at 60–65% LTV.
See also
Closely related terms.
Site Acquisition
The process of purchasing a development site, including negotiation, due diligence, exchange of contracts, and completion.
Bridging Loan
A short-term secured loan used to bridge a gap between a purchase and a longer-term funding solution or sale.
Pre-Planning Risk
The risk that a development site fails to secure planning permission, or that the consent granted is materially different from the scheme envisaged, undermining the project's financial viability.
Residual Land Value
The value of a development site calculated by taking the gross development value of the completed scheme and deducting all development costs including build costs, professional fees, finance costs, and developer profit.
Further reading
Guides that touch this term.
Guide
Using a Bridging Loan to Buy at Auction: A Step-by-Step Guide
Buying at auction requires completing within 28 days. Bridging loans are the go-to funding solution. This guide covers how to get pre-approved, what it costs, and how to plan your exit.
4 min read readReadGuide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readReadGuide
UK Development Finance Market 2026: Rates, Trends and Outlook
A comprehensive overview of the UK development finance market in 2026, covering current interest rates, lender appetite, emerging trends, and what developers should expect over the coming 12 months.
9 min read readRead
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