Specialist skills overcome concerns about deadline

UTIn July, the United Trust Bank Development Finance team was approached by a new customer wishing to secure funding for a scheme to convert offices above commercial premises to nine 2 bedroom residential units. The scheme was made possible by the relaxation of permitted development rights (PDR), an area in which United Trust Bank has gained considerable experience of late.

The issue at the time was that it looked unlikely that the borrower would get vacant possession of the offices until the last tenant moved out of the building in late September. As this was three months before the government had announced its intention to make the changes to PDR permanent, the existing deadline, to complete and sell all of the new units by May 2016, looked very tight indeed.

The borrower was introduced to the Bank through a well-respected broker who spoke very highly of his relationship with the client. The borrower is not a property developer per se but has extensive experience of residential/commercial refurbishment as their principle business activity is commercial shop fitting. Having a proven ability to work to strict and challenging deadlines and the fact the subject development involved little structural work, we were comfortable that they would be able to manage a 16 week works programme which should have seen them safely inside of the May deadline.

Instead of injecting cash as their equity, the borrower provided additional unencumbered makeweight security of c£2m against a £2.1m loan with a GDV of £2.6m.

Although the government’s more recent announcement that the temporary relaxation of PDR regulations will be made permanent certainly took some time pressure off of the borrower, they are nonetheless proving our judgement correct and the broker’s faith well placed as they are already ahead of schedule two months into the project.

Loan – £2.1m

GDV – £2.6m