Auction Finance for the Purchase of an Ex-Clinic with Development Potential

Positive Commercial Finance specialises in arranging Auction Finance for investors and developers purchasing properties under tight auction deadlines. This case study shows how we helped a client complete the purchase of an ex-clinic in the South East by using additional security to fund 100% of the purchase price, while preparing the project for a future development finance facility.

The Challenge

Our client successfully purchased an ex-clinic at auction with plans to redevelop the site.

However, the transaction presented several challenges.

At the time of purchase, the property had development potential but no planning permission. As a result, many lenders viewed the deal as speculative and were reluctant to provide funding.

The client also wanted to use another property as additional security instead of providing a cash deposit. This meant the lender would need to take a second charge over the additional property, adding further complexity to the transaction.

Because the property had been bought at auction, completion also had to take place within a strict deadline.

Before funding could be approved, the lender needed confidence that the proposed redevelopment would be commercially viable.

The client therefore required a funding solution that would:

• Complete within the auction deadline.
• Fund 100% of the purchase price using additional security.
• Support a property with future development potential.
• Provide a clear route to refinancing onto development finance.

Our Solution

Positive Commercial Finance worked with the client and their professional advisers to build a strong funding proposal.

Using reports from the planning consultant, architect and quantity surveyor, we demonstrated that the proposed redevelopment was both practical and financially viable. This gave the lender confidence that the bridging loan could later be refinanced onto a development finance facility.

We then sourced a specialist Auction Finance lender that was comfortable with both the property type and the proposed loan structure.

The lender issued terms quickly, allowing valuation reports to be instructed without delay.

As completion approached, one final obstacle remained.

Consent from the first charge holder over the additional security had not yet been received. Rather than allowing the purchase to fail, we worked closely with the client, solicitors and lender to keep the transaction moving.

The required consent arrived at the last moment, and the loan completed the following day, allowing the client to meet the auction deadline.

Deal Structure

• Loan to Value (LTV): 70%
• Purchase Price Funding: 100% (using additional security)
• Interest Rate: 1% per month
• Arrangement Fee: 2%
• Exit Fee: None
• Term: 12 months

The Outcome

The client completed the auction purchase on time and secured a property with significant redevelopment potential.

By using additional security instead of a cash deposit, they preserved liquidity while creating a clear pathway to long-term development finance once planning permission had been obtained.

This case study demonstrates how Auction Finance can provide flexible funding for complex auction purchases, particularly where properties require planning consent before redevelopment.