Equestrian Land Mortgage

What is an equestrian land mortgage?

Equestrian property is lent on one of three routes, residential, commercial or land, and the planning use, the share of the property that is the home and any business decide which. In our experience a house with stables and a modest acreage (up to about 10 acres) is financed as a residential mortgage. A yard where the land, buildings or business outweigh the home is financed commercially on a component valuation of land, buildings, dwelling and income, and bare land without a dwelling is financed as land. Where an individual (or trustees) borrows and at least 40% of the property is used, or intended to be used, as or in connection with a dwelling by the borrower or a close family member (the statutory test in article 61 of the Regulated Activities Order), the loan is a regulated mortgage under the Financial Conduct Authority's MCOB rules. Otherwise, including where a limited company borrows, it is unregulated commercial or land lending.

Planning sits underneath every case, and lenders read it, with any licence, before the accounts. Land used solely for grazing horses is in agricultural use, while stabling, exercising, schooling, livery and riding tuition are equestrian uses that need planning consent for the change of use and for the buildings (gov.uk planning permission). Riding schools and other businesses hiring out horses for riding or instruction are licensed by the council under the Animal Welfare (Licensing of Activities Involving Animals) (England) Regulations 2018 (gov.uk).

Equestrian land mortgage rates

Equestrian land mortgage pricing follows the route. A home with land is priced as a residential mortgage. A yard run as a business is priced as commercial lending, a margin over Bank Rate or a fixed-rate equivalent, which moves with the loan-to-value (LTV), trading strength and the planning and licence position. Bare land, or land before consent, is priced as land or bridging finance. Arrangement, valuation (on component and going-concern bases) and legal fees also apply. The commercial mortgage guide and the bridging loan guide set out the full structures.

If you are buying a home with stables, a livery yard or a block of paddocks, send the planning history, the acreage and any accounts when you get in touch. Those three decide which lending route applies, and so which rates are available.

Equestrian land mortgage criteria

The criteria change with the route: residential, commercial or land. The table sets out what we see on the cases we arrange. In our experience, a house with stables usually stays with residential lenders up to about 10 acres; beyond that the case generally moves to rural or commercial lending, and outbuildings or any commercial use can move it sooner. On the cases we arrange, terms run up to 40 years on residential lending and up to 30 years on commercial and land lending. Each lender sets its own loan-to-value bands for commercial yards and bare land, according to the planning status, the location and the strength of any trade, so each case is checked against current lender criteria before it is placed. All lending is subject to status, valuation and lender criteria.

Types of equestrian property, and how each is mortgaged

Equestrian property runs from a paddock behind a house to a competition centre with a hundred stables, and the lending route changes along the way.

A house with stables and paddocks

The commonest equestrian purchase is a home with a few acres, stables, a field shelter and perhaps a manège. Where the dwelling is the dominant element this is a residential mortgage: affordability is based on the borrower's income, the residential valuation reflects the land and outbuildings as amenity, and the lender's acreage and outbuilding limits are the constraint. In our experience, around 10 acres is the point at which a house with stables usually leaves residential lending. Beyond those limits, or where the land, the buildings or any income look commercial, the case re-routes to rural or commercial lending. The residential-with-land position is covered on rural mortgages and smallholding mortgages.

Bare equestrian land and paddocks

Land without a dwelling, such as grazing paddocks, a field with a stable block or land with equestrian consent, is financed as land, on a land loan or bridging facility with a defined exit (sale, development, or adding the land to an existing holding), at the point on the lender's land LTV ladder that the planning status and location support. Grazing land is valued at agricultural rates; land with equestrian consent and buildings carries a premium the valuer evidences from comparable equestrian sales. Lenders read the planning position, access, services, water supply and any grazing licences or tenancies that affect vacant possession. Land bought at auction needs completion funding first: see auction property loans and agricultural bridging loans.

Livery yards

DIY, part, full and working livery yards trade on stable rents and charges for services. They are financed commercially on a component valuation: the land at agricultural or equestrian rates, the buildings, the dwelling, and the maintainable income from livery, capitalised where accounts support it. Livery without tuition is not a licensable activity, but the planning consent for equestrian use, the number of stables it permits and any conditions on occupancy of the dwelling decide the sustainable trade. Lenders test debt service coverage on maintainable EBITDA, with the owner's drawings normalised, at a ratio each lender sets.

Riding schools and equestrian centres

Businesses hiring out horses for riding or instruction are licensed under the 2018 regulations, with a star rating and a one-to-three-year licence. They are financed commercially as going concerns, on income from tuition and hire, livery, arena hire, events and retail, less staffing, feed, veterinary costs and the cost of keeping the school horses and premises to the licence conditions. Lenders read the licence and rating, the planning consent for the centre's uses, the insurance position and the operator's qualifications. Riding schools carry key-person risk, which the valuer and lender price.

Studs, competition yards and training establishments

Breeding, competition and training yards earn higher-value but less predictable income, such as stud fees, sales, prize money and training fees. They are financed on the component valuation of land, buildings and dwelling, with the trade supporting affordability cautiously. Lenders give more weight to the land and buildings than to the income, and a lot of weight to the operator's track record. Racing yards fall under separate regulatory regimes, which lenders check.

Farms and smallholdings with equestrian use

Equestrian use on an agricultural holding, such as a farm running livery alongside farming or a smallholding with a professional yard, is financed on agricultural or rural lending, with the equestrian income in the affordability assessment. Where the equestrian business dominates, commercial equestrian terms apply. The underwriting points are any agricultural tenancy, subsidy schemes and the agricultural exemption from business rates, which equestrian use loses.

Land without equestrian planning, and the route to consent

Grazing land bought to become a yard is a two-stage case: land finance on the agricultural value, then, once planning consent for stables, an arena or livery use is granted, a refinance onto equestrian or commercial lending against the consented value. Lenders will not lend on the promise of consent, and existing unauthorised stables awaiting retrospective consent count as a valuation risk; the valuer does not treat them as an asset until consent is granted.

Get in touch with the acreage, outbuildings and planning history for a home with equestrian facilities; the accounts, stable schedule and planning consent for a livery yard; the licence, accounts and consent for a riding school; the accounts and operator history for a stud or competition yard; or the holding's accounts and the split between farming and equestrian income for a farm. Before bidding on bare land or buying land for a future yard, talk to us first: the exit decides the facility, and the two-stage funding is arranged at the outset.

How an equestrian land mortgage is arranged

1. Classification: we establish the acreage, buildings, dwelling proportion, planning use and any trading income from the title, planning history and accounts, and confirm the route (residential, commercial, agricultural or land) and whether the loan is regulated before any lender is approached.
2. Lender match and valuation: the case goes to lenders whose acreage limits, appetite for the use and licence requirements fit, and a valuer with equestrian experience reports on the appropriate basis (residential, component or going concern), with reversion to agricultural value as the land floor.
3. Underwriting and offer: the lender assesses affordability on the borrower's income, or on maintainable EBITDA and coverage, together with planning and licence compliance, rights of way, grazing licences and tenancies. Conditions may attach to regularising a consent or renewing a licence.
4. Legal work and completion: the solicitors review the title (including rights of way and bridleways), planning consents and conditions, any agricultural tenancy or grazing licence, and the licence application for a riding establishment, and the purchase completes.

How equestrian property is valued and underwritten

Three questions sort every equestrian case, in this order: what the land is lawfully used for, how much of the property is the home, and whether there is a business. Each answer leads to a different valuer, lender and product.

1. Keeping horses at grass is agricultural. Stabling, schooling, exercising, livery and tuition are equestrian uses requiring planning consent, and the buildings that serve them (stables, arenas, barns, horse walkers) need consent in their own right. A valuer values grazing land at agricultural rates and equestrian land at the premium that consent, buildings and location support, evidenced from comparable equestrian sales. Unauthorised stables or arenas are a planning risk, and the valuer discounts them. Agricultural land is exempt from business rates; equestrian use is rated, which affects the operating costs a commercial lender deducts.
2. The 40% dwelling test set out at the top of this page decides whether the mortgage is regulated under MCOB. A regulated case is a residential purchase assessed on the borrower's income, constrained by residential lenders' acreage and outbuilding limits (in our experience, about 10 acres for a house with stables), with any equestrian income noted rather than relied on. Where the dwelling is used for less than 40% of the property, or a company borrows, the loan is commercial or agricultural lending assessed on a component valuation and, where a business exists, on trading income. The line decides the lenders, the products and the borrower's protections, so it is settled before the application.
3. Commercial equestrian property is valued in parts: the dwelling on residential comparables, the land at agricultural or equestrian rates per acre, the buildings on their contribution to the use, and, where a livery, school or centre trades, the maintainable income capitalised where accounts support it. Lenders lend against the aggregate at the loan-to-value each sets for commercial equestrian property, with the land's reversion to agricultural value as the floor if the equestrian use ceased. Farms with equestrian income are valued as agricultural holdings.
4. Livery, tuition, hire, arena and events income is assessed on the trading accounts (each lender sets how many years it needs), with the owner's drawings normalised and debt service coverage tested on maintainable EBITDA at the lender's ratio. For riding establishments the licence and its rating are part of the underwriting, because the licence conditions on horses, staff and premises set the cost of trading. Dependence on key people, such as the instructor, the yard manager or the competition rider, is priced into the multiple.
5. Bridleways and public rights of way across the land, private rights of access, grazing licences and agricultural tenancies are reviewed at legal stage and reflected in the valuation; an Agricultural Holdings Act tenancy can materially reduce vacant-possession value. Occupancy conditions on the dwelling, such as an agricultural or equestrian worker's condition, restrict who may live there and reduce its residential value.
6. Land without a dwelling is financed at a loan-to-value the lender sets by planning status and location, with the facility sized to an exit: sale, development into a yard once consent is granted, or absorption into a larger holding. Lenders read the planning status, access, water and services, and any tenancy before the price per acre.

Before the valuer is instructed, a buyer settles the route (residential, commercial, agricultural or land), gathers the planning history, accounts, licence and rights-of-way position, arranges the regularisation of any unauthorised buildings and looks for a lender whose acreage limits and use appetite fit the property. Classifying an equestrian purchase first means the valuer is instructed on the right basis.

For related reading, the commercial mortgage guide covers component valuation and the farms and equestrian lending positions; rural mortgages and smallholding mortgages cover the residential-with-land route; and the bridging loan guide covers land finance before consent.