Case Studies
Speculative flat development
A loan of £106,000 released in stages to fund the conversion of a property into 5 flats.The term was 6 months with interest rolled throughout. The borrower company had already purchased the building from its own resources. Our repayment was to come from the sale of the first 2 flats. One of the directors had substantial experience in building trade, but had not previously undertaken a development project in his own right; the other two directors were “silent” investors.
Why Hampshire Trust?
100% development finance was required for a speculative conversion project. The experienced director had entered into an IVA, the reason for which was satisfactorily explained. He had injected no money into the transaction personally and was reliant upon the involvement of two inexperienced “silent” partners in that respect.
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Loan to refinance land pending receipt of enhanced planning permission
and sale
We provided a loan of £240,000 over a term of 12 months to refinance the borrower company’s loan with another short term lender, who had lost their appetite for speculative property dealings and wished to be repaid. Our security was a first charge on development land with planning consent for office/industrial, valued at £350,000. The borrower intended to apply for enhanced planning permission for leisure use and then sell. Interest was serviced monthly.
Why Hampshire Trust?
Many lenders are not interested in speculative property deals. The borrower company required more time to apply for enhanced planning in order to maximise the potential of the site – time that the existing lender was not prepared to give. The structure of the company and its subsidiaries was complicated and is likely to have been off-putting to some lenders. Likewise the history of the site and the borrowings.
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Speculative residential development in Avon
Our borrowers purchased a derelict public house for £78,000 with loan of £58,000 from their bank. They intended to demolish the pub and build 3 detached houses for sale. Unfortunately the borrowers bank decided not to proceed with the development funding, citing a change of policy as the reason. We provided a facility of £254000 to refinance the existing loan and fund 100% of the build costs, including a 9 month roll-up of interest. The borrowers were experienced builders with a clean credit history, but this was the first project undertaken for their own benefit.
Why Hampshire Trust?
The borrowers bank withdrew support based on a policy decision, put off by the speculative nature of the development. We were prepared to lend 100% of the build costs and allow interest to roll in view of the comfortable loan to value. The borrowers, although experienced builders, had not previously undertaken a complete development in their own right. Their personal cash contribution was also limited, relative to the size of the project.
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Cottage conversion in the Isle of Wight
We provided 100% finance to assist with the purchase and subsequent conversion/refurbishment of a derelict cottage in the Isle of Wight. Our security was a first charge on the cottage together with a first charge on the borrowers’ hotel. The term was 18 months, during which the finished cottage or the hotel was either to be sold or remortgaged. Interest rolled throughout. The borrower was a successful hotelier with a good track record, who had seen an opportunity to prepare for retirement without having to realise his principle property asset to provide a cash contribution.
Why Hampshire Trust?
The borrowers’ bank had declined to assist with 100% finance on a speculative building project for a hotelier with no building experience. In our view, the reasonable loan to value and the positive impression given by the borrower at interview made this a project worthy of support.
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Short term loan to purchase an empty care home for conversion to a
residential training centre
The borrower had agreed a purchase price of £630,000 and having sold her own house (in which there was significant equity), required a loan of £130,000 on day one to assist with the purchase; rising to £230,000 over the next 6 months to fund subsequent conversion and refurbishment works and to cover an interest roll. The borrower had pre-arranged a long term re-mortgage to redeem our loan at the end of the term, subject to completion of the works and the granting of appropriate change of use planning permission.
Why Hampshire Trust?
An open-ended loan on an unusual property with no certainty that planning would be granted for change of use, and therefore that the proposed remortgage could proceed. Having taken advice from our valuer we took the view that the property had potential for various alternative uses and thus even in the worst case scenario our risk was acceptable, particularly given the reasonable loan to value.
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