£2.38m Refurbishment Facility for 10,000sqft Commercial to Resi Conversion Under Permitted Development

An experienced property investor approached Lendhub for a heavy refurbishment facility to support the purchase and conversion of a two-storey, 10,000sqft commercial building in Stevenage. With permitted development rights already in place, the borrower plans to transform the vacant office building into 19 self-contained flats.

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Key Challenges

Tight timeline
The borrower had exchanged contracts without finalising build details, making timely completion of the loan critical.

VAT due, no funds available
VAT was payable on the purchase, but the borrower didn’t have sufficient funds available to cover the upfront cost at completion.

Complex seller circumstances
The property was being sold by receivers, appointed by the previous owner’s lender to recover outstanding debts. However, just before completion, liquidators were brought in, raising questions about any unpaid service charges or other liabilities.

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Solutions

• Gave flexibility on development start

We structured the facility with a two-month pre-commencement period, giving the borrower more time to finalise their build programme and costs.

• Funded the VAT through the facility

We included the VAT amount in the loan and agreed it would be repaid once the borrower reclaimed it.

• Clarified risks early

We engaged with the administrators managing the seller’s affairs and received confirmation that while the amount was unknown, any unpaid service charges would be minimal.

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The Outcome

We delivered a £2.38m facility, 48% LTV and 60% LTGDV over 15 months. The borrower is now progressing with the conversion, with a clear refinance exit in place.

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