A property investor approached Lendhub looking to purchase a five-bedroom house in North London. To reduce their cash input, they proposed leveraging a two-bedroom flat they already owned in Islington.
Both properties were well-located with strong fundamentals. The North London asset, a semi-detached home, was the purchase target. The flat in Islington was tenanted and held solid market value, ideal for an equity release. But unlocking that value came with legal complications that could slow down the process.
Challenge
Legal Restriction on Equity Release Asset
The flat being used to raise equity is an ex-local authority leasehold property, meaning the Islington council has the right of first refusal if the property is put on the market within the first 10 years of the lease being granted.
If the council disagrees with the proposed sale price, a district valuer would be appointed, which could result in a potentially lower market value. This created risk and uncertainty around the borrower’s planned exit strategy.
Solutions
- We structured a £1.35m bridge, leveraging the combined market value of both properties
- We worked with the borrower to agree that timely updates would be provided on the council’s right of first refusal process, ensuring transparency and control throughout the term.
- Our team took the time to fully understand the legal implications of Section 156A and structured the deal to account for possible sale delays.
- Reviewed valuation reports across both assets, which came back aligned with expectations, confirming the strength of the security.
The Outcome
We delivered a £1.35m facility at 75%, allowing the borrower to secure the property using minimal upfront cash.
The borrower operates a well-established property business with strong liquidity. Their track record and clear exit strategy gave us confidence to proceed at pace and deliver the funding needed
