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Financing the Conversion of a Grade II Listed Building – Development Finance

At VIBE, we take pride in helping our clients achieve their property investment goals, no matter how complex. Recently, we assisted experienced clients in purchasing and converting a Grade II listed building into seven self-contained flats. This case study explores the challenges faced, the solutions we provided, and the successful results of this project.

The Challenge:

Our clients aimed to purchase a three-storey mid-terrace Grade II listed building with full planning permission for conversion. The property, valued at £1 million, required significant refurbishment to transform it into seven self-contained flats. The primary challenge was securing the necessary funding for both the purchase and the extensive renovation works, especially given the historical significance and the specific regulations tied to the Grade II listing.

The Solution:

VIBE structured a comprehensive financial solution tailored to the unique requirements of this project. The financing package included:

  • Day 1 Loan: We secured an initial loan of £706,068, allowing our clients to cover a substantial portion of the purchase price.
  • Refurbishment Funding: An additional £493,700 was allocated for the refurbishment, ensuring that the project could proceed without financial constraints.
  • Total Gross Facility: The total financing provided amounted to £1,316,000, covering both the acquisition and the renovation costs.
  • Valuation and Loan-to-Value (LTV): The day 1 open market value (OMV) of the property was assessed at £944,151, with a 75% LTV. Post-renovation, the gross development value (GDV) was projected at £1.880 million, resulting in a loan-to-GDV (LTGDV) ratio of 70%.
  • Term and Exit Strategy: The loan was structured over a 12-month term, with the planned exit strategy being the sale of the completed flats.

The Results:

The structured financing enabled our clients to successfully acquire and refurbish the Grade II listed building. Key outcomes included:

  • Successful Acquisition: The initial loan facilitated the purchase, allowing the project to commence promptly.
  • Comprehensive Refurbishment: The allocated refurbishment funds ensured that the building was converted to a high standard, adhering to the regulations for listed buildings.
  • Enhanced Property Value: Post-renovation, the property’s value increased significantly, aligning with the projected GDV of £1.880 million.
  • Smooth Exit: The sale of the newly created flats provided a profitable exit for the clients, fulfilling their investment goals within the 12-month term.

In Review:

This case study highlights VIBE’s expertise in structuring tailored financial solutions for complex property projects. By understanding our clients’ needs and the unique challenges of converting a Grade II listed building, we provided a robust financing package that facilitated a successful project from start to finish. At VIBE, we are committed to helping our clients realise their property ambitions, no matter how intricate or demanding.

If you have a unique property project and need expert financial guidance, contact us today to see how we can assist you in achieving your goals.

Further Reading and Resources:

Please feel free to check out our Case Studies for intermediaries here and for consumers here.

Contact Us:

Get in touch | Phone: 01329 277 599 | Email: [email protected]

VIBE Finance Socials:

VIBE Mortgages & Protection Socials:

Disclaimers:

VIBE Mortgages Ltd T/A VIBE Mortgages & Protection (Financial Conduct Authority number 966737) is an Appointed Representative of Complete FS Limited which is Authorised and Regulated by the Financial Conduct Authority number 73812.

VIBE Finance is a trading name of VIBE Financial Services Limited. VIBE Financial Services Limited is registered in England and Wales No. 10979822. Registered office: VIBE Financial Services Limited, H4 Daedalus Park, Daedalus Drive, Lee on the Solent, PO13 9FX.

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Case Study 16

Complex made easy

CASE STUDIES

Our experienced clients were purchasing a grade II listed building with full planning to convert to 7 x self-contained flats (via a company share purchase)

Security; Three storey mid-terrace Grade II listed building
Purchase price £1m
Day 1 loan; £706,068
Refurb element; £493,700
Total Gross facility; £1,316,000
Day 1 OMV; £944,151 75% LTV
GDV; £1.880m
LTGDV; 70%
Term; 12mths
Exit; sale

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Case Study 15

Complex made easy

CASE STUDIES

Our client was looking to purchase a site in a limited company name to Demolish the existing house and develop a three storey detached double fronted block of 9 flats (5 x 1 bed and 4 x 2 bed)

Purchase Price; £1,000,000
Development loan; £1,027,000
Total facility including interest £1,779,750
Gross loan day 1 £640,872
Term; 18mth term
GDV; £2,825,000
LTGDV 63%
Exit; sale

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Case Study 14

Complex made easy

CASE STUDIES

Client looking to purchase 4 x vacant commercial units (light industrial) in a limited company. The units had full planning to convert to 4 x 1 bed resi properties in a commercial/resi location.

Security; 4 x vacant commercial units
Purchase price £450k,
Gross loan £296,310
Net loan £290,500 (64.56% LTV)
Term; 9mth term with full interest roll up
Exit; Switch to term finance
Total cost of works; £108k (funded from clients own funds)
GDV of £880k.

We have now arranged a BTL term loan on one application for all 4 BTL units at a borrowing of 75% LTV against a value of £945k

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Case Study 13

Complex made easy

CASE STUDIES

LLH Flat Purchase – light refurb and lease extension

Our client was looking to purchase a LLH flat (66yrs) to spend £40k on works to the property including re-wire, plumbing, new bathroom, kitchen and en-suite to master bedroom (no planning needed and no structural works) and to also extend the lease throughout the bridge to 125yrs

Security; 2 bed long leasehold flat
Purchase Price; £450k
Loan; £306,172 (68% LTV)
Term; 12mth bridge
Cost of works; £40k (funded from client’s own funds)
GDV; £750k

All works were completed, and we are now arranging finance to switch to a term loan with the same lender on a loan amount if £507k against £780k value on a 5yr interest only term.

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Case Study 12

Complex made easy

CASE STUDIES

Our client had 4 weeks to arrange the purchase of a BTL property that required refurbishment works of circa £23k prior to letting

Security; 4 bed detached house
Value; £420,000
Loan; £308,700 (73.50% LTV)
Term; 3mths
Interest rolled
No exit fee

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Case Study 11

Complex made easy

CASE STUDIES

Our client had owned the security since 2008 and was looking to re-mortgage to clear the existing first charge;

Security; Mixed commercial and residential property comprising a retail shop and residential upper parts (A1 retail & C3 residential)
Value; £360,000
Loan; £152,250 (42% LTV)
Term; 10yr term
Repayment; Interest only

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Case Study 10

Complex made easy

CASE STUDIES

Security; Our clients developed a site of 37 light industrial units – they chose to retain 16 of the units and switch from development finance to commercial term finance. Some units were still vacant on completion.

Security; 16 x light industrial units
Value; £3,688,000
Loan; £2,361,450 (64% LTV)
Term; 5yr term
Repayment; Interest only

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Case Study 9

Complex made easy

CASE STUDIES

Security; Our clients developed a site of light industrial units – they sold some off and chose to retain some by switching from development finance to a commercial term loan.

Security; Portfolio re-mortgage of 6 x light industrial units and an office building.
Value; £1,590,000
Loan; £1,158,750
Term; 5yr term
Repayment; Interest only

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Case Study 8

Complex made easy

CASE STUDIES

Our client was looking to purchase a resi 4 bed property to undertake some very light refurb works to convert to a 5 bed licenced HMO. His long-term intention was to apply for planning to develop a block of flats. Mainstream lenders declined due to the commercial location of the security and so a more specialist lender was required;

Security; 4 bed detached property
Purchase Price; £600,000 (vacant possession value)
Loan; £450,000 (75% LTV)
Term; 2yrs
Repayment; Interest only