Flexible funding works out for a multi-use scheme
United Trust Bank’s Development Finance division was approached by a husband and wife team to assist with the refinance and subsequent development of a detached house in South London. The property was purchased with the benefit of planning permission to demolish the existing house and develop a modern block with leisure facilities on the ground and lower ground floors and 8 apartments over the 3 upper floors.
The husband was a qualified architect with a successful track record of similar developments undertaken in various SPV structures or in his personal capacity. The build was to be carried out by a well-established local contractor with relevant experience of this type of project. Having established that the developers and their team would be capable of delivering the project successfully, UTB was able to agree to provide a facility of £2.5m against a GDV of circa £4.6m representing a CTV of 54%.
The clients’ original intention had been to retain the leisure facilities and establish a Yoga / Gym facility. However, with the completion of the development and the creation of 8 highly desirable apartments they instead chose to retain the whole building as an investment. Subsequently, the Bank agreed to a term extension which gave the borrowers time to find tenants for the apartments so that the development facility could be refinanced onto longer term Buy to Let funding.
Steve Brigly, Property Development Director at United Trust Bank, said:
“The fact that we were able to offer attractive terms for the initial development facility and then be flexible enough at the point of completion to allow the borrowers to shop around for tenants and Buy to Let funding was well received by the clients. This cemented a good relationship which we carried on to their next project.
Development Loan: £2.5m