A way forward for an investor facing conversion challenges

Loan Amount:
£2,540,000

Property Value:
£5,720,000

LTV:
59%

Manoeuvring through a conversion plan can be easier said than done. Unforeseen delays can threaten an entire investment strategy.

When this happens, refinancing is often required to get one’s affairs in order and find a way forward. One of our underwriters had to support an investor facing this kind of predicament.

To support the underlying borrower’s conversion plans, we had to make sure there were multiple exit routes available to them. We also had to address the condition of the investment in its existing state.

Offering breathing space

The borrower turned to us for refinance to provide time to tidy up their conversion plans, and move onto development exit finance for the exit strategy. By the end of their investment, they planned to convert a commercial property into a residential space.

But, the condition of the property was poor, given the investor was in the very early stages of works. To ensure the condition of the property didn’t hold back the investment, we ensured that the borrower had multiple exit strategies available to them should their original plan not work out.

We also added additional contingency plans in place to accommodate the state of the underlying property. With everything accounted for, we were able to deliver funding.

A bureaucratic headache

Conversion strategies are likely to become more commonplace over the coming years as investors take advantage of recent permitted development rights[1] changes, in fact we are already seeing plenty of the above cases coming through. How these strategies progress though, will still largely be at the whim of local authorities spread across England and Wales.

Investors are still at risk of being hit by a tricky, bureaucratic system. If they end up facing a brick wall, we will be there to offer flexibility, breathing space, and a way forward.