Permitted development (PD) funding is not a high risk form of lending even though fewer brokers are offering PD products, according to Adapt Finance.

A number of lenders have recently pulled the plug on their PD products, worried that temporary government measures introduced in May 2013 - which allows office space to be converted to residential properties - will not extend beyond the May 2016 end date.

Adapt Finance, however, is still offering PD funding products and does not consider it to be a high risk business.

Jordan McBriar, Director at Adapt Finance, said: “It may seem risky from the perspective of looming deadlines which I cannot discount as potentially problematic, however, we do not introduce business which we wouldn’t write if it was our own money, and similarly our lenders do not write risky business.”

‘PD rights’ allow certain building works and changes of use to be carried out using a quicker application process.

Jordan understands why many brokers have stopped offering PD products as the deadline looms, but is confident that risks can be minimised if deals are properly constructed.

He said: “As long as sanctions are put in place such as ‘lending against the commercial value as opposed the residential value’ the lender will be protected should PD not be extended.”

There has been talk that the temporary government measures will continue past 2016, but councils have started to block applications using the ‘article 4 direction’ which makes planning permission a necessity.

Jordan believes the PD rights will still exist past 2016, albeit with some restrictions.

He added: “We believe we have found a niche that hopefully is here to stay.”

“There is the argument that office space will now become limited but the developments we have focused on are ones in residential locations.

“There is a shortage of housing in built-up areas, that is not in question.

“Offices are now being moved to larger, purpose built sites so we feel there is still room for growth in the PD sector.”