Securing finance to convert and renovate a property into 2 flats

What was the situation?

I was contacted by my client, looking to transfer the ownership of a property from their ex-partner to themselves into a limited company. The case was technically a purchase because the property was owned in the sole name of the ex-partner, and the new ownership entity would be the limited company. The equity in the property was a gift from their ex-partner and formed the deposit for the acquisition.

The property – an end terrace – was located in southeast London and valued at £450,000. As the property needed some renovation, the applicant was keen to apply for planning permission to convert the property into 2 flats whilst subsequently renovating. By doing so, the client planned to use the sale of the finished properties as their retirement pot.  

What was the issue?

The complication with this property was that the deposit was gifted equity from their ex-partner. Lenders felt concerned by this because it was not considered an ‘arms-length’ transaction now that the client and their partner were divorced. However, part of their divorce agreement was that that our applicant would get to keep the BTL property.

What was the process?

After speaking to some of our trusted lenders, I was able to explain the situation to our dedicated relationship managers and loan underwriters.

Initially, they were happy to progress on the basis of a below market value transaction. However, the application faced unfortunate delays with the legal work, which meant that they were no longer suitable. Time was of the essence, therefore I had to find a new lender to give us 100% net lending of the purchase price.

Luckily, I was able to speak to another lender who was willing to consider my clients application on the basis of the property being purchased at market value, with the equity forming the deposit.

What was the solution?

I was able to secure a market leading short-term loan with an extremely competitive rate for the full, required amount. This gave the client exactly what they needed to complete the planned refurbishment works.

They had been trying to find a solution for over a year before speaking with us, so the client was delighted with the outcome achieved.

Need some help in securing short-term specialist property finance? Our experts are on hand to assist. Call 020 3903 9875 to speak to an adviser, or use our online contact form.