A deal is as good as its weakest link

We are currently dealing with financing some ‘illegal’ conversions.  Back in the day when planning was more relaxed than now, many developers were of the opinion they could simply crack on with the work, and apply for what’s known as established use.

This was the way to get what you wanted with the least amount of resistance.  This worked back then; I’m talking a couple of decades ago.

However, it would be a very unwise strategy to follow in the current environment.  The council are a lot more stringent, and even at times seem to exceed their boundaries.  In my experience they assert things that are not true, and then ask you to prove otherwise; leaving the onus of proof upon you.

Nonetheless, we are where we are with these current conversions.  In life, as in property, there is little point in looking backwards.  Should, would and could, have little relevance here.

Therefore, the matter was placed before us to resolve.

The issue has to be regularised as they want funds from the assets.  They require the funds first, as regularisation will take time; and no one knows how much time.

The challenge was to find a lender who would lend on the assets as is.  The obvious choice was a bridge, this is the function of a bridge, to take you from one place to another; not a place where one wants to hang out on too long.  In terms of property it is at times used whilst the planning state of the property is altered.

However, the client did not even like the sound of the word, understandably.

Fortunately, we have a very close connection with an aggressive lender, right down to the owner who started lending at the age of 19 and now has an estimated worth of £2bn.

We presented the scenario and got the deal authorised on a 5 year fixed rate product, when most lenders wouldn’t even take a cursory look at the case.

This will give them enough breathing space to sort out the issue once and for all.  In parallel, we have recommended a good planning consultant who has the ability to solve issues with a sniper, rather than a shot gun.

There is something called established use, whereby if a property has been in the same position for more than 4 years, and you have the documentation to prove this, you can gain planning on this basis.

This process has started in conjunction with the refinance.  This takes the edge of the issue, and gives one breathing space whilst the underlying problem is still being resolved.

Both of the properties concerned are in North West London and are worth in excess of £750K.  But a deal is as good as the weakest link; and if it doesn’t fit into the criteria of most tick box lenders it’s a no go.

Suresh Vagjiani

Suresh Vagjiani
Suresh Vagjiani
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