Shawbrook Case Study: Grade II listed property

By Bridging Loan Directory 10th February 2016

Completion of a Residential Refurbishment (RR1) product, for a total loan amount of £132,413 at a gross LTV of 70%.

Completed via Shawbrook “Strategic Partner” Watts Commercial Finance, the customers were two investors with a strong financial background who came across a Grade II listed residential building in Carlisle at auction, which they believed was a perfect rental solution for doctors at a nearby hospital. The property needed refurbishment work and would then be converted into a House of Multiple Occupancy (HMO), conveniently located in the city centre to service this growing target market.

The customers had concerns in regards to their ability to secure funding due to the building’s Grade II status. However, the Shawbrook lending teams were keen to assist, particularly given the customers’ established track record and strong outside income. With the valuer confirming demand, and having much of the necessary client information from previous cases, Shawbrook were able to proceed to Indicative Mortgage offer (IMO) in just two days from receipt of the application.

Shawbrook took comfort from the fact that Watts’ clients had already instructed an architect, who was discussing the project with the local council’s listed building department. This demonstrated their knowledge of the process and a commitment to gathering the necessary information.

The case proceeded to completion but after four months, Watts Commercial Finance advised Shawbrook that consent from the council had only just been received, significantly delaying the commencement of works to the property. This was due to the lack of a boundary plan defining the extent of the property over which Shawbrook was to take a charge. With the assistance of their in-house solicitors Pure Law, Shawbrook overcame this by obtaining a declaration from the seller confirming the position of the boundaries so that the extent of the property, and Shawbrook’s charge, could be registered at the Land Registry.

Lending guidelines would usually dictate that the customer must finish the refurbishment works within six months of completion, but fluid circumstances and the strength of the customer profile meant that the Bank could be flexible, demonstrating their case-by-case approach in practice to deliver the required funding.

Karen Bennett, Sales & Marketing Director of Commercial Mortgages at Shawbrook added:

“Shawbrook is a relationships focused business, and when investors return to us for additional funding and support, we take this as an indication that our quest to cement good customer outcomes is proving successful. It is also a testament to the faith our Broker Partners place in us that we are able to provide suitable finance options for their clients’ unique circumstances.”

The broker, Steven Hogg from Watts Commercial Finance, commented:

“Having dealt extensively with Shawbrook in the past, it was reassuring to see that the Brentwood based credit team took a pragmatic approach to the news of the delay of commencement of works. The Bank recognised that this was outside the clients’ control. A final benefit for my clients was that once the required works had been completed on the property we were able to release 75% of the after works value, further improving their position.”