Lendhub has provided £2.1m in development finance for a 15-unit residential scheme in Addlestone, Surrey, combining the refurbishment of an existing apartment block with new construction on the same site.
The facility covers the acquisition and refurbishment of a 12-flat apartment block, plus construction of three additional units through a rear extension with planning permission already secured. The project has a projected gross development value of £3m upon completion.
Facility structure
The 18-month development finance facility was structured with 67% loan-to-value on day one and 70% loan-to-gross development value. Lendhub provided a £1.05m day-one advance for the acquisition and an £822,000 build tranche, drawn in stages throughout the refurbishment and development programme, with interest rolled up over the term.
The borrower acquired the property with full planning consent for a three-storey rear extension creating three new residential units. The consent also covers façade alterations and associated parking, landscaping and servicing works.
Jack Glendinning of Lambert Smith Hampton conducted the valuation, whilst IESIS Consult acted as monitoring surveyor. Adam Klein of Atlas Property Finance introduced the transaction.
Combined finance approach
According to Lendhub, demand is increasing for this type of structure among residential investors pursuing value-add strategies. The approach allows developers to refurbish existing units and add new ones under a single facility, rather than running separate bridging and development lines.
The lender sized the facility to cover both workstreams in parallel, with drawdowns tied to the refurbishment programme on the existing block and the construction programme on the extension. This structure differs from traditional approaches where separate financing arrangements would typically be required for each component.
The combined scheme is projected to increase the asset value from £1.56m on entry to just over £3m. Dan Margolis, relationship manager at Lendhub, said: “The borrower had two jobs on one site: refurbish the existing 12 flats and build three new units at the back. Packaging it as one facility rather than two was the right commercial call, but it needed credit, the broker, and the monitoring surveyor aligned from day one.”
Klein noted: “The client needed a lender willing to look at the whole site rather than splitting the refurb and the new build into separate facilities. Lendhub engaged with the combined structure from the outset and matched the pace required to complete on the acquisition.”
Market context
The transaction reflects broader activity in the development finance sector, where lenders are adapting products to accommodate mixed-use projects on single sites. This approach contrasts with more traditional large-scale development schemes that typically involve new-build construction only.
The Addlestone scheme represents a growing segment of the market where investors acquire existing residential assets with potential for both refurbishment and expansion, seeking to maximise returns through dual value-add strategies on a single site.
