Loan Amount: £645k
We were contacted by our client – a landlord of a pub in Reading with a value of £1.2m. The pub had a separate outbuilding where he lived with his family and above the business premises itself were two self contained flats.
As the current flats were very large, he was finding it difficult to rent them out on a long term basis with the majority of the rental market in the town being taken up by students and young professionals. He therefore decided to refurbish and split the two flats into four – thereby making them a more attractive rental option for his target demographic. However, he did not have the required finance or planning permission in place to undertake such a venture.
Having spoken to his bank and a number of other lenders with no success, he contacted our Specialist Lending team to see if there were any other options available to him.
Undertaking a full fact find with the client of their personal situation and the business numbers for the pub we found through conversations with our broad lender base that we were able to secure £100k to allow them to undertake and obtain the necessary planning permission.
Once planning permission was in place we were then in a position to drawdown the additional £545k they required to undertake the refurbishment and redevelop the flats. By arranging the release of the funds in two separate stages (to obtain planning and then to undertake the refurb), we were able to minimise the amount of interest the client was liable to pay over the course of the loan.
The client was then able to split the two flats into four and therefore appeal to a much wider market whilst also obtaining much higher rental yields from four sets of tenants.