Croydon Development Finance Example Scenarios

The developer had identified a substantial Victorian warehouse building situated within the Thornton Heath commercial quarter, an area undergoing steady transformation as part of the wider London Road corridor regeneration. The building had been vacant for over three years and was previously used for light industrial storage, leaving it in a state of significant disrepair. The roof structure required full replacement, and there were concerns around potential contamination from historic commercial use that needed environmental assessment before works could proceed. Planning permission had been secured for a mixed-use scheme comprising 12 residential apartments across the upper floors and two commercial units at ground level designated for creative workspace use, in keeping with the local planning authority's requirements for the area. However, the planning consent included several onerous conditions, including a requirement to retain and restore the original brick facade and a Section 106 obligation for affordable workspace provision at the ground floor level. The principal challenge from a financing perspective was the layered risk profile of the project. The conversion works were technically complex, requiring structural steel reinforcement throughout the building, new floor plates, and the careful integration of modern building services within the constraints of the existing envelope. The developer, while experienced in residential new-build, had limited track record in commercial conversion projects of this nature. Additionally, the total project cost exceeded the developer's available equity, and mainstream lenders were reluctant to provide the required leverage given the mixed-use element and the area's still-emerging residential market at higher price points.

We structured a blended senior and mezzanine facility totalling £4.2 million, which provided the developer with the leverage needed to proceed without diluting equity through a joint venture arrangement. The senior tranche of £3.1 million was provided at 65% LTC with a competitive rate, secured against the freehold interest in the property. The mezzanine layer of £1.1 million sat behind the senior debt, bringing total leverage to approximately 82% of costs and 72% of the projected gross development value. A critical element of the financing solution was the phased drawdown structure. Given the technical complexity of the conversion, funds were released against a detailed cost plan verified by an independent monitoring surveyor. Early drawdowns covered the environmental remediation works and structural stabilisation, with subsequent tranches tied to specific construction milestones. This approach gave both the developer and the lending syndicate confidence that the project was progressing in line with the approved programme. We also negotiated flexible terms around the commercial element. Recognising that the ground-floor workspace units would likely be let rather than sold, the facility included a provision for partial repayment upon sale of the residential units, with an extended tail on the remaining balance to allow time for the commercial lettings to complete. This avoided the developer being forced into a fire sale of the commercial space at practical completion. The mezzanine provider was introduced through our network of specialist development finance lenders who understood the Thornton Heath market and had appetite for conversion schemes in regeneration areas. Their participation was conditional on a minimum pre-sale threshold of 30% of the residential units, which the developer achieved within eight weeks of launching the scheme to market.

The project completed on programme at 17 months, one month ahead of the original 18-month facility term. All 12 residential units were sold within four months of practical completion, achieving an average price per square foot that was 8% above the original appraisal estimates, reflecting the continued strengthening of the Thornton Heath market during the development period. The two ground-floor commercial units were let to independent creative businesses on five-year leases within six weeks of completion, generating a combined rental income that supported the developer's decision to retain these as a long-term investment asset. The senior and mezzanine facilities were repaid in full from residential sales proceeds, with the developer realising a net profit margin of approximately 22% on the total scheme. The success of this project has since enabled the developer to secure further financing for two additional conversion projects in the wider Thornton Heath area, building a growing portfolio of mixed-use assets in the borough.

The developer, an established regional housebuilder expanding into the London build-to-rent market, had acquired a prominent site in Colliers Wood with full planning consent for a seven-storey residential building comprising 45 apartments. The site benefited from excellent transport links via Colliers Wood Underground station on the Northern line, and the River Wandle running along the eastern boundary of the plot. However, the project presented several distinct financing challenges that required careful navigation. The most significant issue was the developer's stated intention to retain the completed building as a build-to-rent asset rather than selling individual units. This strategy, while commercially sound given the strength of rental demand in the area, created a fundamental mismatch with conventional development finance structures that rely on unit sales to repay the loan. Most development finance lenders underwrite their facilities against projected sales receipts, and the absence of a clear exit through disposal made the proposition more complex to place. Further complicating the picture was the scale of the construction programme. The building required piled foundations due to the ground conditions close to the River Wandle, and the reinforced concrete frame construction methodology meant a longer build programme than a typical timber-frame scheme of comparable size. The developer's quantity surveyor had estimated a 20-month construction period, but contingency planning needed to account for potential delays associated with the riverside location, including flood mitigation considerations for the groundworks phase. The site was also subject to a complex Section 106 agreement requiring the delivery of 35% affordable housing, delivered as affordable rent units integrated within the main building. This reduced the net developable area generating market-rate income and added complexity to the management structure post-completion. Several lenders approached during the initial financing process expressed concern about the blended yield profile when affordable and market-rate units were considered together.

We secured a £12 million senior debt facility from a specialist lender with an established appetite for build-to-rent schemes in south London. The facility was structured with a 24-month term, providing comfortable headroom beyond the projected construction programme, and included a six-month tail period to allow the developer time to stabilise the rental income and arrange long-term refinancing onto an investment facility. The key innovation in the financing structure was the dual exit mechanism. The facility agreement permitted repayment either through refinancing onto a term loan once the building was stabilised and generating rental income, or through outright disposal of the completed building to an institutional BTR investor. This flexibility was critical in securing competitive terms, as it demonstrated to the lender that multiple viable repayment routes existed regardless of market conditions at completion. Drawdowns were structured against an independently verified cost plan, with the monitoring surveyor conducting monthly site inspections and certifying progress before each tranche was released. The lender required a minimum equity contribution of 25% of total project costs, which the developer funded from retained profits on previous schemes and a small equity injection from their family office backers. We also facilitated introductions to two institutional BTR investors during the construction phase, enabling the developer to conduct soft market testing and receive indicative offers for the completed asset well before practical completion. This forward planning proved invaluable in providing the lender with comfort around the exit strategy and gave the developer a clear benchmark against which to assess the refinancing option. The affordable housing component was addressed through a registered provider partnership, with a housing association agreeing to take a head lease on the affordable units prior to construction commencing. The capitalised value of this income stream was factored into the overall scheme economics and helped strengthen the lending proposition.

Construction completed in 21 months, marginally over the original programme but well within the facility term. The building achieved practical completion to a high specification, with all 45 units finished to a turnkey standard suitable for immediate letting. The market-rate apartments were launched to the rental market three weeks after practical completion, and the building reached 85% occupancy within the first 10 weeks of marketing. Rental levels achieved across the market-rate units averaged 6% above the original underwriting assumptions, driven by continued demand from professionals commuting into central London via the Northern line, and the growing cluster of businesses establishing themselves around Colliers Wood and Wimbledon. The affordable units were handed over to the registered provider partner on schedule, with all tenancies commencing within the first month. The developer ultimately chose to retain the building and refinanced the development facility onto a five-year investment loan at a significantly lower interest rate, reflecting the stabilised income profile. The net initial yield on the completed asset was 4.8%, and the developer has since commenced pre-application discussions with the local planning authority for a second phase of development on an adjacent site.

A boutique developer specialising in high-end residential projects had secured an exceptional site in West Wickham — a former garden centre occupying approximately 0.4 acres on a quiet, tree-lined road within walking distance of Norman Park and West Wickham Common. Planning consent had been granted for six detached townhouses, each comprising approximately 2,800 square feet of accommodation across three storeys, with private gardens, integral garages, and premium specification throughout. The site acquisition had been funded through a short-term bridging loan, which was approaching its maturity date and needed to be refinanced as part of the development finance package. This created time pressure on the financing process, as any delay risked the developer incurring penalty interest or, in the worst case, enforcement action from the bridging lender. The total project cost, including the site acquisition, professional fees, construction costs, and finance charges, was estimated at £5.6 million. The developer's equity position was constrained. While they had a strong track record of delivering premium residential schemes in south-west London, their capital was substantially committed across two other active projects, leaving limited headroom for a conventional 70-75% LTC facility that would require significant cash equity. They needed a financing structure that maximised leverage while remaining commercially viable at the price points being targeted. A further complexity arose from the planning conditions. The local authority had imposed stringent requirements regarding tree preservation on the site, including a condition that a mature London plane tree near the site boundary be retained and protected throughout the construction process. This constrained the site layout and construction methodology, requiring hand-digging of foundations in certain areas and limiting the use of heavy plant in the proximity of protected root zones. The arboricultural constraints added both cost and programme risk that needed to be factored into the financing structure. The West Wickham market, while traditionally resilient, had experienced some price softening at the very top end during the preceding 12 months, and there were questions about the depth of demand for new-build townhouses at the projected price points of approximately £1.5 million per unit.

We arranged a stretch senior facility of £3.8 million, structured to provide leverage of approximately 68% of the gross development value and 80% of total project costs in a single tranche. The stretch senior approach eliminated the need for a separate mezzanine layer, simplifying the capital structure and reducing the overall cost of finance compared to a traditional senior-plus-mezzanine arrangement. The facility was structured to immediately refinance the existing bridging loan on the site, removing the time pressure and associated refinancing risk. The balance of the facility was available for drawdown against the construction cost plan, with monthly valuations conducted by a RICS-registered monitoring surveyor. The 15-month term was based on the developer's construction programme of 12 months with a three-month sales buffer. To address the lender's concerns around market risk at the upper price points, we worked with the developer to commission an independent Red Book valuation from a surveyor with deep expertise in the Bromley market. The valuation supported the projected GDV of £9.2 million and provided comparable evidence from recent transactions demonstrating sustained demand for family-sized new-build homes in the borough, even in a slightly softer market. The report specifically highlighted the scarcity value of new-build detached houses in West Wickham, noting that fewer than 10 comparable properties had come to market in the preceding two years. We also structured a pre-sale covenant within the facility that required the developer to achieve exchange on a minimum of two units before the final construction drawdown was released. This mechanism aligned the interests of the lender and the developer, encouraging early marketing while providing the lender with tangible evidence of market absorption before full commitment of funds. The arboricultural constraints were managed through a detailed method statement prepared by the developer's contractor and approved by the local authority's tree officer, with the associated additional costs built into the contingency provision within the cost plan.

The development was delivered on programme, with practical completion achieved at 13 months. The construction quality was exceptional, with each townhouse featuring bespoke joinery, engineered oak flooring throughout, Gaggenau kitchen appliances, and landscaped private gardens designed by an award-winning Kent-based landscape designer. The mature London plane tree was successfully preserved, and its presence was subsequently used as a positive selling feature in the marketing materials. Four of the six townhouses were sold off-plan prior to practical completion, exceeding the pre-sale covenant and demonstrating strong market demand at the price points achieved. The remaining two units sold within six weeks of completion, with the final unit achieving £1.62 million — the highest price per unit in the scheme and approximately 5% above the original appraisal. The total GDV achieved was £9.45 million, marginally above the original projection of £9.2 million. The developer repaid the stretch senior facility in full from sales proceeds within 14 months, one month ahead of the facility expiry. The net developer profit on the scheme was approximately 24% on cost, and the project has been cited by the local planning authority as an exemplar of sensitive infill development in a conservation-adjacent setting.

The developer had assembled a site comprising three adjacent commercial properties on a prominent high street frontage in Croydon town centre. The properties — a former bank branch, a vacant retail unit, and a two-storey office building — had been acquired individually over a period of 18 months through a combination of direct negotiation and an off-market introduction. The consolidated site presented an opportunity to deliver a substantial mixed-use scheme in an area benefiting from significant public and private investment, including the planned Westfield shopping centre redevelopment and ongoing improvements to the East Croydon transport interchange. Planning consent had been secured for a six-storey development comprising 28 residential apartments on the upper floors, with three retail units and a restaurant space at ground floor level. The scheme included 25% affordable housing delivered through a shared ownership model, and the design incorporated a communal roof terrace and concierge area for the residential component. The financing challenge was multifaceted. The total development cost was estimated at £12.2 million, including the aggregate site acquisition cost of £3.8 million. The developer's equity was limited to approximately £3.7 million, meaning external financing of £8.5 million was required — a level of leverage that exceeded most senior lenders' comfort zones for a scheme of this nature in Croydon, where residential values were demonstrably below inner London levels. The mixed-use element introduced additional complexity. Retail lettings in Croydon town centre had been challenging in recent years, with vacancy rates above the London average, and lenders were understandably cautious about underwriting commercial income projections in this environment. The restaurant unit required specialist fit-out provisions and a pre-let or strong indication of demand before lenders would factor it into their valuations. Further complicating matters was the demolition and construction methodology. The existing structures needed to be carefully demolished given the proximity of adjacent occupied buildings, including a listed Victorian terrace immediately to the rear of the site. Party wall agreements were required with multiple adjoining owners, and the foundation design needed to account for the load-bearing requirements of the new six-storey structure on a site with varied ground conditions reflecting the different construction eras of the original buildings.

We structured a combined senior and mezzanine package totalling £8.5 million. The senior facility of £6.2 million was provided at 60% of GDV by a specialist development lender with existing exposure to the Croydon market and a constructive view on the borough's regeneration trajectory. The mezzanine tranche of £2.3 million was sourced from a private credit fund, bringing total leverage to 70% of GDV and approximately 78% of total development costs. The facility structure reflected the phased nature of the development. An initial tranche covered the demolition and enabling works, with subsequent drawdowns tied to construction milestones verified by the monitoring surveyor. A key structural feature was the ring-fencing of the commercial and residential elements within the cost plan, ensuring that the residential construction was not cross-subsidising any overruns on the commercial fit-out. To address lender concerns about the commercial element, we worked with the developer to secure a pre-let agreement on the restaurant unit with an established independent operator who had been seeking a Croydon location. This commitment, formalised through an agreement for lease conditional on practical completion, materially improved the commercial income profile and gave the mezzanine provider confidence in the blended scheme economics. For the remaining retail units, the developer agreed to offer six-month rent-free periods to attract tenants, with the associated void cost budgeted within the development appraisal. The affordable housing component was structured through a partnership with a registered provider who agreed to purchase the seven shared ownership units off-plan at an agreed price, providing the lender with a guaranteed minimum sales receipt equivalent to 25% of the total residential GDV. This de-risked the sales programme significantly and enabled the monitoring surveyor to certify these receipts within their periodic valuations. We also arranged a performance bond from the main contractor, a regional building firm with a strong track record in mixed-use schemes, providing additional security to the lending syndicate in the event of contractor insolvency during the build programme.

The development completed in 21 months, one month ahead of the facility term. The construction programme was managed effectively despite the constraints of the town centre location, with minimal disruption to the surrounding commercial tenants and no material party wall disputes with the adjoining owners. The 21 private residential units were marketed from month 14 of the construction programme, and 18 were sold prior to practical completion. The remaining three units sold within eight weeks of completion, with the final achieved GDV across the residential component coming in at £14.2 million — approximately 3% above the original appraisal. The seven affordable units were transferred to the registered provider on schedule, generating receipts in line with the agreed pricing. The commercial element proved more successful than initially projected. The restaurant unit opened within six weeks of handover and has since become a popular local destination. Two of the three retail units were let prior to completion, with the third unit let within three months on terms that exceeded the underwriting assumptions. The total scheme GDV, including a capitalised valuation of the commercial income, reached £18.4 million. Both the senior and mezzanine facilities were repaid in full, and the developer achieved a profit on cost of approximately 19%. The scheme has been recognised by the Croydon Business Improvement District as a positive contribution to the town centre's regeneration.

The developer identified a mid-floor suite within a 1980s commercial building on the fringe of Sutton town centre, comprising approximately 6,200 square feet of Grade A office accommodation. The space had been vacated by its previous tenant, a professional services firm that had consolidated into smaller premises following a permanent shift to hybrid working. The building's freeholder was motivated to sell, having seen the office vacancy rate in the building rise to over 40% and recognising the increasing viability of residential conversion in the surrounding area. The developer had secured a Prior Approval under Class O Permitted Development rights, enabling the conversion of the office space into eight residential apartments without the need for a full planning application. This PD route offered significant advantages in terms of speed and certainty, but it also imposed limitations — most notably, the inability to extend the building externally or make material changes to the elevations, constraining the design options for the residential layouts. The primary financing challenge was the speed of execution required. The freeholder had agreed to sell the long leasehold interest at a price of £1.4 million, but only on the basis of a 28-day exchange and a further 28-day completion. This timeline precluded the use of conventional development finance, which typically requires 8-12 weeks for due diligence and credit approval. The developer needed immediate access to acquisition funding, followed by a seamless transition into development finance for the conversion works. The conversion itself, while not requiring structural alterations, involved substantial mechanical and electrical works. The office space had a raised floor and suspended ceiling system that needed to be stripped out, and the residential conversion required the installation of new plumbing stacks, individual heating systems for each unit, and acoustic separation between apartments to meet Building Regulations Part E requirements. The existing single-aspect fenestration on one side of the building meant that four of the eight apartments would have limited natural light, requiring creative design solutions to maximise their appeal and value. Additionally, the London Borough of Sutton had historically been cautious about the loss of office space, and while PD rights overrode the need for planning permission, the developer needed to manage the relationship with the local authority carefully to ensure smooth progression through the Prior Approval and building control processes. There was also a service charge obligation to the freeholder for the ongoing maintenance of the common parts, which needed to be factored into the development economics.

We devised a two-stage financing strategy that addressed the developer's need for speed on the acquisition and certainty on the development works. The first stage was a £1.15 million bridging loan, arranged and funded within 18 days of the initial enquiry. This facility enabled the developer to meet the freeholder's aggressive exchange and completion timeline, securing the leasehold interest at the agreed price. The bridging rate reflected the speed premium but remained commercially viable given the projected scheme economics. The second stage was a development exit facility of £950,000, structured to refinance the bridging loan and fund the conversion works. This facility was arranged in parallel with the bridging loan, with credit approval secured in principle prior to the site acquisition completing. The seamless transition between the two facilities meant the developer experienced no funding gap and could commence the strip-out and conversion works immediately upon taking possession. The combined facility of £2.1 million represented a conservative 58% of the projected £6.8 million GDV, reflecting the lender's assessment of the prime City location and the relatively low-risk nature of an internal conversion under PD rights. The modest leverage also reflected the developer's strong equity position, funded through the sale of a previous project in south-east London. To address the design challenges posed by the single-aspect units, we introduced the developer to an interior design consultancy specialising in compact urban living. Their input resulted in a scheme that maximised ceiling heights by removing the suspended ceiling grid, introduced full-height glazing where possible, and specified a high-end material palette including polished concrete floors, bespoke fitted joinery, and integrated smart home technology. These design decisions were instrumental in positioning the apartments at the premium end of the Sutton residential market. The development exit facility included a flexible repayment structure, allowing the developer to discharge the loan on a unit-by-unit basis as sales completed, reducing the outstanding balance and associated interest costs progressively through the sales period.

The conversion works were completed in just nine months, reflecting the efficiency of the internal-only scope and the absence of structural alterations. The eight apartments were finished to an exemplary standard, with the design consultancy's input elevating the specification well beyond typical PD conversion schemes. The units ranged from one-bedroom apartments of 480 square feet to a duplex penthouse of 1,100 square feet created by negotiating a licence with the freeholder to access the roof level for a private terrace. The marketing launch generated significant interest, with the scheme positioned as luxury City living for professionals and investors. Five of the eight units were sold within the first six weeks of launch, with prices ranging from £625,000 for the smallest one-bedroom unit to £1.35 million for the penthouse duplex. The remaining three units sold over the following eight weeks, bringing the total achieved GDV to £7.1 million — approximately 4.4% above the original appraisal. The bridging and development exit facilities were both repaid in full within 12 months of the original acquisition, two months ahead of the combined facility term. The developer achieved a profit on cost of approximately 31%, making this one of the highest-returning schemes in their portfolio. The success of the project has prompted the developer to actively source further PD conversion opportunities in Sutton and surrounding town centres.

The site comprised a 1.8-acre former local authority housing estate in New Addington that had been decanted and cleared for redevelopment as part of the London Borough of Croydon's ambitious regeneration strategy. The estate, originally built in the 1960s, had been identified as no longer fit for purpose due to persistent maintenance issues, poor thermal performance, and a layout that created anti-social behaviour concerns. The borough had secured vacant possession and was seeking a development partner to deliver a high-quality mixed-tenure scheme that would set the standard for the wider estate renewal programme. The developer, a mid-sized housebuilder with a growing presence in south London, was selected through a competitive tender process. The winning proposal comprised 85 units across four residential blocks of between four and six storeys, with a tenure mix of 40% affordable rent, 20% shared ownership, and 40% private sale. The scheme also included landscaped communal gardens, a residents' community room, and a new pedestrian route connecting the site to the nearby Croydon town centre and the tram network. The financing requirement was substantial. The total development cost was estimated at £20.8 million, including construction costs of £16.5 million, professional fees, Section 106 contributions, and a land payment to the borough structured as a deferred consideration linked to scheme viability. The developer's available equity was approximately £5.8 million, creating a funding gap of £15 million that needed to be filled through external financing. The blended tenure mix created significant challenges for conventional development finance. The affordable rent and shared ownership units generated lower per-unit values than private sale, compressing the overall scheme margin. Lenders needed to be comfortable that the cross-subsidy model worked commercially, with the private sale units generating sufficient value to support the delivery of the affordable housing without eroding the developer's return below viable levels. Ground conditions on the site presented further complications. The former estate had been built on made ground with substantial below-grade infrastructure including redundant drainage runs, former foundations, and areas of potential contamination associated with a historic industrial use pre-dating the housing estate. A Phase 2 ground investigation had identified the need for remediation works estimated at £480,000, adding cost and programme risk to the early stages of the development. The scale and duration of the project also meant that market risk was a significant consideration. With a projected construction programme of 24 months and a further sales period beyond that, the development was exposed to potential shifts in the residential market, particularly at the affordable end where grant funding and registered provider appetite could fluctuate with changes in government housing policy.

We structured a £15 million financing package comprising two complementary elements: £4.5 million of JV equity from a specialist residential development fund, and £10.5 million of senior debt from a bank lender with a strong appetite for affordable-led regeneration schemes in London. The JV equity component was critical to making the scheme viable. The equity investor took a co-investment position alongside the developer, sharing both the risk and the profit on the private sale element of the scheme. The JV was structured through a special purpose vehicle, with the developer retaining management control and the equity investor receiving a preferred return followed by a profit share above a hurdle rate. This arrangement allowed the developer to proceed with the scheme without being over-leveraged, while giving the equity provider exposure to a well-located regeneration project with strong fundamental demand drivers. The senior debt facility of £10.5 million was structured with a 30-month term, reflecting the extended construction programme and anticipated sales period. Drawdowns were phased across the four residential blocks, with the first block commencing immediately and subsequent blocks starting at staggered intervals to manage cash flow and allow early sales from the completed units to begin reducing the outstanding loan balance before the full facility was drawn. A crucial element of the financing was the pre-agreement with two registered providers for the affordable housing component. Prior to financial close, we facilitated negotiations that resulted in binding contracts for the acquisition of all 34 affordable rent units and 17 shared ownership units at agreed prices. These guaranteed receipts, totalling approximately £11.2 million, provided the senior lender with substantial downside protection and enabled the facility to be priced competitively. The deferred land payment to the borough was structured with a viability review mechanism, ensuring that the land cost adjusted if actual sales values diverged materially from the appraisal assumptions. This arrangement, while complex to negotiate, aligned the interests of the local authority and the developer and provided a further layer of protection against downside market risk. The remediation works were funded from the initial drawdown of the senior facility, with an environmental warranty obtained from a specialist insurer providing coverage for any unforeseen contamination liabilities arising during or after the construction period.

The development was delivered in phases over 28 months, with the first block achieving practical completion at month 16 and the final block completing at month 28 — two months ahead of the facility expiry. The phased delivery approach proved highly effective, with sales from the first completed block generating £3.8 million of receipts that were applied to reduce the senior debt balance before the final construction drawdowns on the later blocks. All 34 affordable rent units and 17 shared ownership units were transferred to the two registered provider partners on programme, generating the contracted receipts and fulfilling the Section 106 affordable housing obligations. The 34 private sale units were marketed from month 14, with 28 sold prior to practical completion of their respective blocks. The remaining six units sold within 12 weeks of final completion, achieving prices that averaged 4% above the original appraisal assumptions. The total achieved GDV was £33.2 million, exceeding the original £32 million projection. The senior debt facility was repaid in full from a combination of registered provider receipts and private sale proceeds. The JV equity investor received their preferred return plus a profit share, and the developer retained a net profit on the scheme of approximately 16% on total costs — a strong result for a scheme with a 60% affordable housing content. The completed development has been recognised by the borough as a flagship project in their estate renewal programme, and the developer has been invited to tender for two further phases of the wider regeneration masterplan. The scheme has also won a regional housing design award for its contribution to placemaking in New Addington.

The developer had identified a narrow infill plot on a residential street in West Norwood, situated between two Victorian terraced properties. The site, measuring just 28 feet in width and 65 feet in depth, had previously accommodated a single-storey workshop building that had been demolished following a fire several years earlier. The plot had remained vacant since, partially due to the constrained dimensions and partially due to the complexity of developing between two occupied residential properties with shared party walls. Planning permission had been granted for a new-build four-storey building containing four apartments: two one-bedroom units of approximately 550 square feet each on the lower floors, and two two-bedroom units of approximately 780 square feet on the upper floors. The design, by a well-regarded London architecture practice, featured a contemporary brick facade that responded sensitively to the Victorian streetscape while clearly reading as a modern insertion. The scheme had been well received by the local planning committee and was approved without amendment. The financing challenge centred on the unusually tight site constraints and their impact on the construction programme and cost. The narrow frontage meant that all construction materials and plant had to be delivered and stored on-site within an extremely limited footprint, ruling out conventional construction methodologies that rely on extensive site compounds and material laydown areas. The developer's contractor had proposed a hybrid construction approach using a structural steel frame with precast concrete floor planks, minimising the need for wet trades and reducing the on-site construction period. Party wall agreements with both adjoining owners were required under the Party Wall etc. Act 1996, and the process proved protracted. One of the adjoining owners appointed a particularly cautious surveyor who insisted on extensive pre-condition surveys and a detailed schedule of condition for their property, including internal inspections of every room on the party wall side. The party wall process added three months to the pre-construction programme and generated professional fees of approximately £45,000 that needed to be absorbed within the development budget. The developer was a relatively new entrant to the London market, having previously completed two smaller projects in north London. While their track record demonstrated competence and good construction management, the limited portfolio meant that some lenders were reluctant to extend facilities at the leverage level required. The developer had equity of approximately £500,000 available for the project, requiring external finance of £1.8 million against a total development cost of £2.75 million. Additionally, the West Norwood residential market, while fundamentally strong, was characterised by discerning buyers with high expectations regarding specification and finish. The developer needed to deliver a product that would stand comparison with the numerous high-quality period conversions and boutique new-builds that characterised the local market, while managing costs tightly on a scheme where the margins were sensitive to any cost overrun.

We arranged a stretch senior facility of £1.8 million, providing leverage of 65% of GDV and approximately 75% of total development costs within a single debt tranche. The stretch senior structure was chosen deliberately to avoid the additional cost and complexity of a mezzanine layer on what was a relatively modest-sized scheme, where the incremental cost of a second tier of debt would have materially eroded the developer's margin. The lender was a specialist development finance provider with a strong appetite for well-designed infill schemes in prime London locations. Their familiarity with the West Norwood market and appreciation of the design quality were instrumental in securing competitive terms despite the developer's relatively limited track record. We presented the lending proposition with a comprehensive information package including the full planning file, detailed construction methodology, a programme prepared by the contractor, and comparable sales evidence from recent new-build transactions within a half-mile radius of the site. The facility term was set at 12 months, reflecting the contractor's compressed construction programme of 8 months enabled by the hybrid steel-and-precast methodology. A four-month buffer was built in for sales, although the developer intended to market the units off-plan from month three of the construction programme to generate early interest and, ideally, pre-completion exchanges. Drawdowns were structured on a monthly basis against certified interim valuations, with the monitoring surveyor required to confirm that the works were proceeding in accordance with the approved programme and cost plan before each release. A 10% contingency was held within the cost plan to cover any unforeseen issues arising from the constrained site conditions or the party wall interface with the adjoining properties. To mitigate the risk associated with the developer's limited track record, the lender required a personal guarantee from the developer's principal and a collateral charge over an unencumbered investment property held within their personal portfolio. These additional security elements enabled the lender to offer pricing that was competitive with facilities available to more established developers. We also introduced the developer to a sales agent specialising in new-build properties in Lambeth, whose market knowledge proved invaluable in setting pricing levels and advising on the specification choices that would resonate with the target buyer demographic of young professionals and downsizers in the borough.

The construction programme was delivered in 9 months, one month longer than the original estimate due to a brief delay during the foundation works when an uncharted Victorian drain run was encountered beneath the site. The issue was resolved within two weeks through a redesigned drainage connection, and the additional cost was absorbed within the contingency provision without requiring any variation to the facility. The four apartments were completed to an outstanding specification. The interior design featured wide-plank engineered oak flooring, Porcelanosi tiling to the bathrooms, handleless Matt lacquer kitchens with integrated Miele appliances, and floor-to-ceiling aluminium-framed windows that maximised natural light throughout. The two upper-floor apartments benefited from private balconies with views across the West Norwood roofscape, which proved to be a significant selling point. Three of the four units were sold off-plan, with exchanges completing between months five and seven of the construction programme. The fourth unit, the upper-floor two-bedroom apartment with the larger balcony, was held back deliberately and launched at practical completion, achieving a price of £1.22 million — a premium of approximately 8% over the off-plan sales, reflecting the buyer's ability to view and appreciate the finished product. The total achieved GDV was £4.65 million, exceeding the original projection of £4.5 million. The stretch senior facility was repaid in full within 10 months of the initial drawdown, two months ahead of the facility expiry. The developer achieved a net profit on cost of approximately 28%, an exceptional result for a scheme of this scale and a validation of the strategy of targeting premium infill sites in established prime London locations. The project has significantly enhanced the developer's track record and credibility in the London market, and they have since secured stretch senior financing for two further infill projects in neighbouring Herne Hill and Tulse Hill.