The number of conversions of farm buildings into new homes dropped 20% in the last year, denting hopes that these conversions could help solve the rural housing crisis, says Lendy, one of Europe’s largest peer-to-peer secured lending platforms.

Only 1,511 agricultural-to-residential conversion applications were approved in 2016/17*, down from 1,890 in 2015/16. Lendy adds that local authorities rejected 38% of all applications for converting farm buildings to houses last year.

Lendy says converting outbuildings such as barns and stables into housing can be an effective way of combating the UK’s housing shortage, which is being felt just as badly in the countryside as it is in cities. For example, a recent development of eight new houses in rural Cornwall had over 800 people apply to rent, demonstrating the demand for more rural housing.

As well as making unused buildings available for new housing, selling surplus outbuildings to convert can provide farmers with a vital source of additional income.

Lendy adds that in addition to the fall in applications and high number of refusals, another issue for developers is that bank lending to property developers remains low. Many developers can struggle to finance conversion projects through traditional means. Bank of England figures show that in December 2013, over £34 billion in lending was outstanding from banks to property developers, but this plunged to just £14.8 billion in December 2017.

As a result, more and more developers are turning to alternative forms of finance, such as peer-to-peer lenders, to build more homes.

Liam Brooke, Co-Founder of Lendy, says “Converting farm buildings is one of the easiest ways to help solve the rural housing shortage, so this sharp drop-off in approvals is very disappointing.

“Agricultural-to-residential conversions can be a win-win for everyone –farmers can unlock capital from their land and more homes get built for prospective buyers – helping to close the housing gap.

“It doesn’t make sense to have so many redundant outbuildings that have no aesthetic value at all slowly decaying when they could be turned into homes.

“A shortage of bank finance for these conversions is another issue. This is why so many developers are turning to alternative forms of finance like P2P to get viable projects off the ground.”