May 30, 2019 admin



Our Borrower had the option to purchase a semi commercial building with an existing commercial tenant in place in the North of England.  The purchase price was agreed subject to planning being obtained.

The security was a former retail property set over 2 floors – the ground floor commercial element was let on a long term lease to a strong covenant who would remain in situ.

The top floor of the security premises was derelict and it was our Borrower’s intention was to redevelop this part of the building into a 16 bed mid-market HMO.  The client did not require development funding as he was using his own funds and as such was just looking for funds to complete the purchase.  Prior to Development Money getting involved, the Borrower had another offer of 75% of the purchase price from another lender.  However, due to spending significant money in the planning process his requirements changed that he required 75% of the enhanced value with the benefit of the planning permission being granted not the purchase price.

The £46,000 planning gain allowed our Borrower an extra £34,500 which greatly assists with cash flow on a development of this nature. We were able to secure our Borrower their loan over a 24 month term at 1% per month.   We maximized his net advance further as interest was serviced from the commercial rent received. The benefit of this for our Borrower is that not only will he deposit less money on the purchase on day one, he will pay the facility as he goes within the term set.

The longer loan term of 24 months will give him the opportunity to complete the development, put tenants in place and eventually refinance onto a commercial mortgage, without strict time constraints.   It was important to the Borrower to have this flexibility as he had other ongoing projects to focus on in the short term.

Staged improvement photos to follow……