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The Client’s Situation
The client acquired a vacant commercial property (previously a restaurant, with a studio flat above) and planned to convert it into 4 residential flats as a long-term investment. They were a first-time property investor but worked in quantity surveying and already had a team to carry out development works. They purchased the asset under a limited company, intending to refinance to a buy-to-let mortgage post-conversion.
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The Challenge
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The client needed acquisition funding before conversion works could begin.
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They also required works-funded financing, but many lenders wait until works are fully complete.
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The 4th flat was delayed, so the client had to restructure security: convert that flat into a separate leasehold title so the lender could lend on the 3 completed flats while treating the 4th via a Gross Development Value (GDV) basis.
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The lender had to be comfortable with a staged approach and flexible legal/valuation structuring.
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Our Solution
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We secured a bridging loan at 65% LTV on the purchase price of £125,000, giving £81,250 for acquisition.
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The client carried out conversion works costing £130,000.
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Because the 4th flat was delayed, we restructured: split its title and had the lender lend against the 3 completed flats plus use a GDV approach on the 4th.
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The 3 completed flats were valued at £270,000, and the 4th’s GDV was £90,000.
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The lender agreed to lend 75% on the £270,000 valuation, i.e., £202,500.
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The bridging loan was repaid, leaving £121,250 remaining for the client, while the 4th flat (unencumbered) was retained worth £90,000.
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The Result
Acquisition via bridging: £81,250
Conversion costs: £130,000
Valuations: 3 flats at £270,000; 4th flat’s GDV at £90,000
Refinance on completed portion: £202,500 (75% LTV on £270,000)
After repaying bridging, £121,250 remained, plus the client retained the unencumbered 4th flat valued at £90,000
This structure enabled the client to extract significant value from the development while maintaining flexibility despite delays.
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Client Feedback
“I’ve used Advocate Finance on two occasions now; firstly to arrange a bridging loan to purchase a commercial property and then to refinance the same property once it had been converted into flats. On both occasions I worked with Henry and his service was fantastic. He found me great deals, was very helpful and also highly professional throughout the process.”
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How We Can Help You
If you are converting a commercial property into residential units and need acquisition or works funding, even with phased completions or delays , Advocate Finance can structure a tailored solution combining bridging and long-term refinancing, maximising your outcome.
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