Bridging - Residential
HARROW ROAD - WEMBLEY
PIVOT PROVIDES DEVELOPMENT EXIT BRIDGE SECURED AGAINST SEMI-DETACHED HOUSE AND LAND WITH PLANNING
GROSS LOAN £931.5K LTGDV 67.88% DEAL TYPE RESIDENTIAL BRIDGE DEAL DURATION 6 MONTHS
Harrow Road, Wembley
The Opportunity
Pivot’s borrowers initially took a facility from another lender to purchase a semi-detached house, which included land to the rear with draft plans for the construction of a terrace of 3 new townhouses with their own private access. The borrowers extended the house itself during the term of the initial loan, to provide a modern 4 bedroom/2 bathroom home.
Due to various factors, the refurbishment was delayed and whilst Practical Completion had been achieved, the external landscaping had not been completed and the asset was not sold. As such, Pivot was approached to provide a development exit bridge to refinance the incumbent lender.
The security package included a second property which comprised a terraced BTL property in East London, currently a 3-bedroom HMO, valued at £600,000 with £269,000 equity outside of the £331,000 mortgage commitment. Adding the additional property enables Pivot to release enough funds to redeem the incumbent lender in full.
The property is on the Harrow Road, mid-way between Harrow and Wembley in Northwest London, with nearby local amenities, 8-10 min to overground and underground stations with a 15 min journey into central London; plus a selection of both primary and secondary schools making it ideal for families. The property and development fit in well with this residential area of a popular north London suburb.
One of the trio of borrower partners is a seasoned builder with a successful 15-year history of working in the trade, along with experience of buying and converting older properties for his own portfolio. Another partner is a well-established financial broker with his own extensive experience of successful property development for himself, and the third partner is an experienced businessman, ideally placed to project manage the development.
The Deal
The borrowers acquired the site with the additional land at the rear which had an indication of approval for an additional 3-house development for £875,000, plus stamp duty and other fees. The clients then obtained planning permission for the 3-house scheme, immediately increasing the site value to between £1.25m and £1.4m.
The borrowers’ strategy was to finish the external landscaping associated with the existing house refurbishment and sell this main security for c.£825K within a 6-month window. Then, refinance the outstanding balance, secured against the land with planning, and build the 3-unit development scheme which has an estimated value on completion anticipated at around £1.835.
Pivot was selected as the most appropriate finance partner as the platform was able to provide the initial bridge, and also pre-underwrite the development finance required for the 3-unit ground-up development project.
As a contingency in an uncertain property market due to the economic crisis, the option of refinancing and renting the terraced houses was considered as a fall-back option, the anticipated value of rental income being more than sufficient to service further financing until market conditions stabilised and improved.
Key Transaction Highlights
· Simple and straightforward short-term development exit bridge facility to enable the borrowers time to sell the existing property on the site in advance of starting the new build.
· Second charge taken on secondary BTL security, to release additional leverage to enable incumbent lender to be redeemed in full.
· Funding of secondary development ready to go with planning consents and professional team in place.
· Experienced trio of borrowers with previous small development expertise.
Deal Team
Relationship Manager: Tim Akin, Pivot
Credit Manager: Matt Rodgers, Pivot
Legal: SCW Solicitors
Valuation: Capital Value Surveyors
Tim Akin at Pivot, said
“This was a great opportunity to work with a new introducer and fund a lucrative purchase and potential small townhouse development opportunity in a desirable residential area of north London, ideal for both families and/or commuters. The deal was a simple and straightforward bridging facility, bread and butter work for Pivot, and allowed us to demonstrate our capability, diligence and speed of response, all of which were gratefully received and the deal done very quickly and easily to everyone’s satisfaction.”
Quote from the broker (Paul Roberts at Cain Lambert Financial Services LLP):
“I approached Pivot following an initial meeting at the FP Show in 2021, having been very impressed with their experience, expertise and ‘can-do’ attitude, and this seemed an ideal project to start what I hope will be a long-term relationship with them. To date, everything has run to schedule with no problems at all and both I and my clients are delighted.”
Our Origination Team
TIM AKIN
BUSINESS DEVELOPMENT MANAGER
M +44 (0)7785 568 454
D +44 (0)20 3695 5511
View full details of other case studies at: pivotfinance.co.uk/news