Development Finance Secured for a Time-Critical Auction Refurbishment and Conversion Project
What was the situation?
The client, a Quantity Surveyor undertaking his first refurbishment and conversion project, successfully secured a three-bedroom terraced property at auction in South London. The property had been owned by the previous occupier for many years and required full modernisation throughout.
His intention was to refurbish the property and convert it into two self-contained residential flats. To proceed, he required development finance for an auction purchase, including funding for the refurbishment and conversion works.
With a fixed auction completion deadline and no previous development track record, the funding needed to deliver strong leverage, speed and certainty.
What was the issue?
Auction purchases demand absolute deliverability, and as a first-time developer, the client needed a lender comfortable with both the property and the proposed scheme.
This was also the clients second recent attempt at securing a property at auction, which heightened the importance of structuring funding that could move quickly, withstand scrutiny, and complete within the contractual window.
What was the process?
Nick McLean, Associate Director – Specialist Finance, shaped the funding strategy, positioned the transaction with the right lender and coordinated the professional parties involved.
Nick selected a development finance lender with strong appetite for auction purchases and first-time refurbishment projects. Once legal due diligence began, a complication emerged: the neighbouring property had undertaken loft works, prompting party wall concerns from the lender’s solicitors. This led the valuer to reduce the open market value by 15% because a party wall award was in not place, materially impacting the leverage and placing pressure on the funding structure at a critical stage.
Nick took immediate control of the issue. He engaged directly with the party wall surveyors, obtained formal confirmation that the works were complete, and secured internal photographic evidence. He then coordinated with the valuer and lender to arrange a reinspection of the subject property, ensuring a clear understanding of the condition and security position.
Following the reinspection, the original valuation was reinstated, allowing the lending structure to proceed as planned.
With the transaction progressing under tight auction deadlines, the vendor agreed a 10-day extension. The case completed successfully on the final day of that extension.
What was the solution?
LDN Finance secured a development finance facility at 75% net LTV on day one, with 100% of refurbishment costs funded through staged drawdowns on an 18-month term.
The funding enabled the client to complete the purchase, begin refurbishment immediately and deliver his first conversion project with confidence.
Despite the legal and valuation challenges encountered during the process, the transaction completed within the extended auction timeframe. The client described the experience as highly pressurised, but greatly valued the guidance, technical intervention and lender coordination that ensured the deal reached completion.
This case showcases LDN Finance’s expertise in structuring and delivering time-critical development finance for auction purchases, particularly for first-time developers navigating complex legal and valuation issues.
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