A mid-terraced property in Wales has been converted from a three-bedroom dwelling into a four-bedroom house in multiple occupation (HMO) using a two-stage financing structure from a single lender, according to details released by Hope Capital Property Finance.
The borrower acquired the property for £85,000 and subsequently drew £52,000 in refurbishment funding at 75% loan-to-value with an interest rate of 0.89%. The case was arranged by Lyndsay Kent of TBK Mortgage Studio.
Planning and financing structure
The transaction required coordination between acquisition and development phases due to Welsh planning regulations. HMO conversions in Wales fall outside permitted development rights, requiring formal planning consent before refurbishment works can commence.
Hope Capital Property Finance initially provided a purchase bridge facility to enable the acquisition. Three months later, the borrower refinanced onto a refurbishment facility to fund the conversion works. The lender used its Flip+ proposition to connect the two facilities, with tranches released on the same day that monitoring agent reports were received.
According to Sam Lea, national account manager at Hope Capital Property Finance, the structure allowed the borrower to “secure the property first, while also having a clear route into refurbishment funding when they were ready to progress.”
Cost structure and timeline
Rather than paying two separate facility fees, the borrower paid an uplift fee on the additional refurbishment funding alongside a single administration fee covering legal costs. A desktop valuation supported the initial purchase, with a full valuation conducted once planning permission was secured.
The lender offered an 18-month term, though the borrower completed the conversion works within 12 months. The financing structure did not include a minimum interest period for the initial bridge facility.
The case demonstrates continued activity in the specialist property finance sector, where lenders are structuring products to accommodate multi-stage development projects. Recent data shows UK mortgage approvals rose 11% in the second quarter, though HMO conversions typically require specialist finance outside standard mortgage products.
Dual legal representation was used across both facilities, with continuity maintained by underwriter Stacey Bradwell, who handled both the acquisition and refurbishment stages. Kent noted that Hope Capital Property Finance “made what could have been a very difficult case easy for my borrower” by providing solutions throughout the planning and development process.
The HMO sector continues to attract investor interest despite regulatory challenges in different regions. However, landlords face operational pressures, with rent arrears affecting 26% of landlords in the past year, according to recent industry data.
