A quick decision on a £1.8m property improvement facility
Our customer, Bruce Burkitt of propertyexperts.co.uk, is an experienced and successful property professional and has developed over 700 units, many of which he has retained for his multi-million-pound, private portfolio. Whilst Bruce and his team continue to grow his portfolio, he also provides mentoring sessions for budding developers as well as overseeing projects for retained investor clients.
On this occasion, Mr Burkitt had identified a detached, 3 storey house in South Croydon with potential to convert to seven self-contained flats. Once completed, the flats would be let and added to the company’s growing buy to let (BTL) portfolio.
The house was previously used as a children’s home and the improvement works required were extensive. As well as internal remodelling, Mr Burkitt planned to excavate the basement and add a single storey extension to the rear.
Mr Burkitt had obtained permission to convert the house prior to committing to the purchase. Having recently completed a similar scheme on an adjacent property, he was well prepared for any foreseeable complications and knew what was needed to deliver another successful project.
Mr Burkitt contacted broker Bruno Welch of Commercial Finance Practice who in turn approached United Trust Bank to provide the circa £1.8m required to cover the purchase price, cost of works and other fees, costs and interest for the 12- month facility. As a valued UTB customer and someone Gavin Diamond, Commercial Director – Bridging, has known for many years, the Bank was keen to support his latest project.
By providing UTB with a charge over three unencumbered properties within his portfolio in addition to the Croydon house, Mr Burkitt was able to keep his cash requirements to a minimum. The proceeds of the loan facility provided him with a Day 1 amount to buy the property and then fund 100% of the total cost of works in tranches, an overall loan facility of 66% of GDV. The works were estimated to take 8-9 months with the completed flats valued at around £2.5m. The exit to the UTB bridging loan will be via a BTL refinance once the scheme is finished.
As well as the usual valuations, UTB’s in-house asset manager, Nick Hudson, met Mr Burkitt and his team on site to appraise and fully understand the scheme, as well as visit Property Expert’s similar conversion nearby.
With everything in order, UTB quickly agreed the facility, their lawyers arranged the security paperwork and the first tranche of the facility was drawn down soon afterwards.
Bruce Burkitt commented:
“The speed of arranging bridging, especially with a specialist like UTB, is really important to me. Despite what some market indices might suggest, it’s a competitive market and there’s always interest in sites and properties with development potential. When I see an opportunity, I must be able to move quickly.
“UTB are quick, dependable, commercially minded and tenacious. As such, they look at a proposal and think ‘how can we do this deal?’ If they need to take a charge on some additional security, they process this quickly without delay. They have exceptionally good lawyers and work with a team of leading professionals to get the job done. It gives me the confidence when considering a project that I can move quickly and talk to experts like Gavin and his team at any stage of the transaction.”