Refurbishment facility gives borrower options

United Trust Bank’s (UTB) Bridging team was approached to assist a borrower wishing to purchase a 3 bedroom detached house in North West London. The intention, following the acquisition, was to seek planning permission to convert the house into two apartments.

The borrower was an experienced property professional, owning several other investment properties in addition to his home. Although the borrower did not have previous experience of similar projects, he had already received positive feedback on his intended scheme from architects and the local authority and precedent already existed on other properties in the same street.

The cost of the conversion works for the intended scheme were estimated to be in the region of £135,000 with a completed GDV of £0.9m. The apartments were to be sold once finished to provide the exit.

Having appraised the proposal, UTB agreed to provide a facility of £318,000 towards the purchase of the property and to fund the full cost of works of £135,000 for the intended scheme. The borrowers requested to receive the works costs in three tranches of £45,000, following inspections by the Bank’s asset manager. The term of the loan was set at 18 months; 9 months to obtain the necessary planning permission and to complete the works and a further 9 months to market and sell the apartments to repay the loan.

In the event that the planning application proved to be unsuccessful, the borrower had a plan B. He would instead carry out a refurbishment of the house as a single dwelling at an estimated cost of £85,000 with a GDV of £740,000. The works would still be fully funded by UTB and the house sold to repay the loan.

The loan completed soon after application and the scheme is now awaiting planning permission.

Loan facility: £512,000

LTV: 49% Day 1; 57% of GDV