Using their property development company, our client purchased a 19th-century church that lay vacant and unmaintained for a number of years. They worked with the local council to obtain planning permission to convert the property into 20 residential apartments which had a GDV of £1,200,000. The client secured funding for the conversion works (£600k) and progressed with the works. However, during the process, their architect passed away and as a result, the clients had to work with the council’s planning committee to complete the works on a design and build basis.
On completion of the works, the client intended to transfer the property into their property portfolio company. When using a previous broker they were unable to source funding due to the property not having an NHBC Warranty or Architect certificate and as a result, faced losing the property due to the existing funder requiring their funding to be repaid.
The client’s solicitor recommended Cornerstone Commercial Finance due to our experience in dealing with out-of-the-norm proposals. An additional issue that arose was the funders requiring that the property be transferred at full market value with cash transferred between the respective SPVs. As the client did not have the funds we took on the challenge of discussing this with the funder and confirmed to them that all taxes were being paid at the full market value from one SPV to the other. We were able to get an indemnity agreed with the underwriter, which determined that the transferring SPV waived their rights to the shortfall of cash (£300k) being transferred in the event that either/or SPV hit liquidation issues in the future.
With regards to the issues of the lack of NHBC Warranty or Architects certificate, we arranged for this to be the first action to be addressed between the solicitors where it was established that due to the property being a conversion as opposed to a new build then an NHBC Warranty was not required. Instead, the funder was able to accept a retrospective certificate to cover the works of the conversion.
As the client’s existing loan from an alternative funder had expired, the funder started to apply pressure for full repayment and had indicated that if they were unable to do so, the property could be repossessed. To help solve this, we liaised with the client, existing funder, new funder, and both sets of solicitors to obtain credit approval for the extension of their funding through to completion and full repayment with the client servicing the interest at a cost of £4k pcm.
By using our extensive knowledge of the market, we acted as both High Street Banking Senior RM and dedicated commercial finance broker to liaise with all parties and overcome the issues that were encountered. The client was extremely satisfied with our service and we were able to achieve their goals of refinancing the property, release funding for their next project, and prevent the church development from being repossessed. We are delighted to also now be involved in assisting with the sourcing and managing the client’s other developments.