Development Finance for the Conversion of an Ex-Pub into 11 Flats

Positive Commercial Finance specialises in arranging Development Finance for property conversions, helping experienced developers maximise borrowing once planning permission has enhanced a site’s value. This case study shows how we secured funding for the conversion of a former public house in London into 11 self-contained apartments.

The Project

Our client secured an option to purchase a well-located former public house in London, subject to planning permission being granted for residential conversion.

The agreed purchase price was £875,000.

Once planning consent was approved for 11 self-contained flats, the property’s value increased to just over £1 million, creating a significant planning uplift before completion.

The developer wanted to take full advantage of this additional value by securing the highest possible level of funding towards the purchase.

Building the Right Funding Package

Because our client had a strong track record of delivering similar conversion projects, we were able to approach several specialist development finance lenders.

Rather than choosing the cheapest interest rate, the client prioritised the lender offering the highest net advance on completion.

This approach reduced the amount of capital required to acquire the site while still providing competitive funding for the development itself.

The chosen lender agreed to fund 90% of the original purchase price and 100% of the build costs and professional fees, with development funds released in staged drawdowns as work progressed.

Deal Structure

• Purchase Funding: 90% of the purchase price on Day 1
• Build Costs: 100% funded (drawn in arrears)
• Loan to Gross Development Value (LTGDV): 70%
• Interest Rate: 0.65% per month
• Arrangement Fee: 2%
• Exit Fee: 1% of the facility amount
• Term: 18 months

The Result

The client acquired the property with only a modest capital contribution while securing full funding for the construction phase.

By leveraging the increase in value created through planning permission, the funding package maximised borrowing and preserved the developer’s cash for future opportunities.

This case study demonstrates how specialist Development Finance for Property Conversion can help experienced developers unlock the value of planning gains, reduce upfront investment and successfully deliver commercial-to-residential conversion projects.