Financing solutions secured by vacant land

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I have noticed a surge in demand during 2024 for financing solutions secured by vacant land. Enquiries have extended to both purchases and refinances.


It is commonly known that many non-bank and private lenders don’t accept land as acceptable security. This is not the case with Vado Private. Not all land is the same. There are many factors that will determine a lenders appetite to advance funds secured against vacant land. These include:


1. Land Zoning. Land with planning controls that allow redevelopment are lower risk. Examples are residential, commercial or industrial. Other types of zoning (farming, recreation, infrastructure) are considered more specialized or may not be acceptable security.


2.  Englobo land or registered land. Englobo land is undeveloped and largely un-serviced. They are typically zoned to allow for subdivision into smaller serviced parcels.


3. Raw or Planning Approval. Land that benefits from Development Application / Planning Permit approval carries lower risk.


4. Access to services. This includes water, sewer, NBN etc. 


5. Environmental issues. Factors that will impact value and security acceptability are to contamination, artefacts, flora and fauna or bush fire prone land.


6. Easements. These are restrictions on the land that can limit any potential future redevelopment.


7. Land size. Lenders can impose limits on the land size. For some this is 100 acres. Others have no restrictions.


8. Supply and demand. This is important to establish market depth and liquidity.


The specific land profile will determine the appropriate LVR. Typical leverage on vacant land ranges from 50-70%. Other factors influencing LVR will be:


1. Borrower plans with the land;

2. Development potential or equity uplift; 

3. Loan term; and 

4. Exit strategy.


For brokers, here are three tips on presenting land deals:


1. Understand the lender’s lending criteria: Familiarise yourself with the specific lenders criteria including location, zoning, minimum lot sizes, development / permit approvals, access to utilities, environmental considerations, and potential future use of the land.


2. Mitigate any risks: Identify and address risks associated with the vacant land. Useful material would be valuation, geotech, bushfire, flora & fuana reports and any feasibility studies.


3. Educate your clients: Help your clients understand the nuances of financing vacant land and set realistic expectations regarding information required and potential challenges.


Vado Private provides bespoke financing solutions tailored to the specific needs of borrowers. We would love the opportunity to chat to you regarding any scenarios or questions. Please contact the Business Development team at Vado Private to discuss any opportunities on the details below, or you can submit a scenario online via our website.


VADO 25.03.24-104 Web
VADO 25.03.24-061 Web

Hien Nguyen
0424 983 770

Sanjay Anand
0424 486 788

Geoffrey Spencer
0405 709 913