The Vacant Property Refurbishment Grant has one brutal flaw: it pays after the work. If you are buying a derelict house you need the purchase price and the renovation money up front, and the grant is no use at that moment.
This is the loan built to close that gap, and it is the least known part of the whole vacant homes package.
Quick facts
- Two parts
- A fixed rate mortgage, plus a variable rate bridging loan
- The bridging loan
- Covers your approved grant, interest-only, no interest charged
- For
- First-time buyers and fresh start applicants refused by commercial lenders
- The property
- Must qualify for the Vacant Property Refurbishment Grant
- Use
- Your main home — it cannot be rented out
- Affordability
- Repayments under 35% of net household income
What it is
"The Local Authority Purchase and Renovation Loan (LAPR) is a government-backed mortgage and loan that helps you to buy and renovate a derelict or uninhabitable home."
It comes in two pieces: "A fixed rate mortgage loan" and "A variable rate bridging loan".
The bridging half is the clever bit: "The bridging loan is for the amount you’ve been approved for the Vacant Property Refurbishment Grant. You pay the bridging loan back as soon as you get the grant. The bridging loan is interest-only, which means you repay the balance and the interest but are not charged for the loan."
So the grant money is effectively advanced to you, and handed back when the grant lands.
Who it is for
"The Local Authority Purchase and Renovation is for first-time buyers, and ‘fresh start applicants’, who have been unable to get funding from commercial lenders, such as banks and credit unions. It is an extension of the Local Authority Home Loan ."
As with the Local Authority Home Loan, being refused by the banks is a condition rather than an obstacle — it is what the scheme exists for.
Which properties qualify
"The Local Authority Purchase and Renovation Loan is only available for homes that qualify for the Vacant Property Refurbishment Grant (VPRG) . So, the property must be vacant for at least 2 years and meet the other criteria for the VPRG. However, for this loan the property must be used as your main home and cannot be rented out."
That last clause is the difference between the two schemes. The grant itself can be used on a property you intend to rent out. This loan cannot.
What decides how much you get
Affordability first: "You need to show that you can afford your monthly mortgage repayments, which must be less than 35% of your net household income."
Then the value: "The value of your home is taken as the estimated value of the property after the renovations are done. This value cannot exceed the maximum market property values for the Local Authority Home Loan in your area."
Note that it is the after value, not what you pay for the wreck. That cuts both ways — it helps the loan-to-value sum, and it can push a well-located house over your county's maximum market value.
The approved grant amount and the scale of the renovation work also feed in, along with what the Department calls project viability — how likely the job is to finish on time and on budget.
Common questions
What is the Local Authority Purchase and Renovation Loan?
A government-backed mortgage and loan that helps you buy and renovate a derelict or uninhabitable home. It has two parts: a fixed rate mortgage loan and a variable rate bridging loan.
Do I pay interest on the bridging loan?
The bridging loan is interest-only, which means you repay the balance and the interest but are not charged for the loan. It covers your approved Vacant Property Refurbishment Grant and is repaid as soon as the grant arrives.
Can I rent the house out?
No. For this loan the property must be used as your main home and cannot be rented out, even though the Vacant Property Refurbishment Grant itself can be used for a rental.
Who qualifies?
First-time buyers and fresh start applicants who have been unable to get funding from commercial lenders such as banks and credit unions. It is an extension of the Local Authority Home Loan.
How much can I borrow?
It depends on affordability — repayments must be less than 35% of your net household income — plus the loan to value, the grant amount approved, the scale of the renovation and the project's viability.
How is the house valued?
On its estimated value after the renovations are done, and that value cannot exceed the maximum market property values for the Local Authority Home Loan in your area.