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.
Key Challenges
Tight timeline
The borrower had not finalised details on the build but had exchanged, so we had a hard deadline for completion.
VAT due, no funds available
VAT was payable on the purchase, but the borrower didn’t have the funds ready to cover it.
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.
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.
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.
