A developer client had negotiated a significant discount to purchase an ex-local authority flat in a 3-storey Victorian townhouse in south-west London, for £200k.
The current market value for the 1-bed ground floor flat was confirmed to be £325k by the lender's independently appointed surveyor.
Planning consent is in place to allow a conversion and single-storey extension to create a 2-bed flat. A cost of works at £70k will then give an end value of £600k.
The client borrowed a net amount of £200k to cover the purchase, with a further £50k agreed to be drawn-down in two stages to contribute towards the cost of works, in arrears.
Interest will roll-up over a 9-month term.
As the client is a builder himself, he will be undertaking the works and is confident in completing the renovation within three months, giving six months to sell the property on the open market. Three local agents have confirmed that a sales price of £600k will be “easily achievable” within that time frame.
The lender was comfortable enough to lend against value as opposed to purchase price given the current value, meaning the developer’s cash contribution was kept to an absolute minimum. A great deal for all involved.
info@positivecommercialfinance.co.uk
www.positivecommercialfinance.co.uk
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