Open storage and IOS finance

How much can you borrow against open storage and IOS land?

Borrowing on an income-producing open storage or IOS site is sized off the leases, the underlying land value and the loan to value (LTV) a lender will set, rather than a building. We typically arrange a commercial mortgage up to around 65 percent loan to value, with lenders relying on the land value, the lawful use for storage and the strength of the income.

The very low building content means there is little plant or structure to fall back on, so lenders lean on the land and the permitted use when sizing the loan. The scarcity of consented sites near ports, rail terminals and motorway junctions supports both demand and value. We structure the loan for an investor landlord or an owner-occupier, sized against the leases and the land the income sits on.

Because the class is newer than mainstream sheds, matching the deal to a lender that understands open storage is part of the work. A funder comfortable with land-led security will look at the lawful use, the income and the location rather than expecting a building to lean on, which is often what allows an income-producing yard to reach a sensible loan to value on a commercial mortgage.

What makes open storage different to underwrite?

Open storage and IOS sites are secured, surfaced and fenced yards rather than buildings, so underwriting differs from a conventional industrial unit. With little or no structure, lenders lean on the underlying land value, the planning and lawful use position for open storage, and the quality and length of the income, since there is no building to provide residual security.

The class is increasingly recognised by institutions but remains newer than mainstream sheds, so the group of lenders comfortable with it, while growing, is narrower. They value the very low capital expenditure and the scarcity of consented land near key transport nodes when setting loan to value, while testing that the permitted use and the lease structure are secure enough to support the income over the term.

Because the value rests on the land and its consented use, the planning position carries more weight here than on a building-led asset. A site with an established lawful use for open storage and a clear title reads far more favourably than one where the use is uncertain, and that distinction often shapes both the appetite to lend and the loan to value a lender will set.

Can you finance land with little or no building on it?

Yes. We arrange a commercial mortgage against income-producing open storage yards where the security is the land and its lawful use rather than a structure. Lenders rely on the land value, the planning position for storage and the strength of the leases, and they value the very low capital expenditure that comes with having little building to maintain.

For sites being cleared, surfaced, fenced and serviced we source development style facilities for the works, which are modest compared with constructing a warehouse. Where land is bought ahead of fit-out or a change of use we arrange bridging to secure it, then move clients onto a term commercial mortgage once the yard is let and producing stable income.

The low works cost is part of the appeal, since surfacing and fencing a yard is far cheaper and quicker than putting up a building. That keeps the capital at risk during the works modest, which lenders read favourably, and it means a site can move from bare land to income-producing yard relatively quickly before the term commercial mortgage goes in place.

The flexibility of the income is part of the picture too. Open storage and IOS leases are often shorter or more flexible than those on a let warehouse, which suits operators that need land at short notice but means lenders look closely at the quality and continuity of the income. We present the lease structure and the lawful use together so the loan to value reflects a realistic read of the land and the income it produces.

Can you refinance or remortgage an IOS site?

Yes. We refinance income-producing open storage yards onto a new investment commercial mortgage or term loan once the site produces stable income, commonly to release equity, fix a rate or replace a maturing facility. The loan to value is reset against the current rent and the land value, so a site where lettings have firmed up the income can support a larger advance than at purchase.

Where a site has just been surfaced, fenced and let, timing a refinance after the income stabilises often improves the loan to value available, as the growing institutional recognition of the class supports the value the loan is sized against. Lenders continue to focus on the lawful use and the lease structure at refinance.

Is an IOS site better held as an investment or owner-occupied?

Both routes are seen, and the right one depends on the client. A logistics or construction operator may buy a yard to use itself, holding the land as a long-term asset and servicing an owner-occupier commercial mortgage from its trading cash flow. With little or no building to maintain, the very low capital expenditure means the running cost of owning the site is modest, which suits an operator that needs secure, well located land near ports or the road network.

For a landlord, an income-producing yard is an investment sized on the leases and the underlying land value, with rental income covering the debt. Either way lenders rely on the land and its lawful use for storage rather than a structure, so they focus on the planning position and the strength of the income when setting the loan to value.

Open storage and IOS has no standalone published rent or yield series, so we underwrite each site on its land, lawful use and leases rather than headline logistics benchmarks. We arrange owner-occupier mortgages for operators buying their own yard and investment mortgages for landlords holding let land, structuring each to suit how the site is held.