Four stone barns, and a planning permission worth protecting

Two directors with a twenty year working partnership in construction approached us directly to fund the purchase and conversion of four traditional stone barns into family homes, with full planning consent already in place.

Between them they brought forty years of managing construction companies, including principal contractor roles — the sort of borrower who has run projects considerably more complicated than this one.

The consent carried pre-commencement conditions, and the borrower had spent the previous twelve months discharging them. The permission had a hard expiry date, and it had to be lawfully implemented before it ran out — otherwise the whole scheme fell away.

This is the point at which a lot of barn and conversion schemes come unstuck. A permission implemented without every pre-commencement condition discharged first may not be valid at all, and that tends to be discovered far too late.

We worked through the position with the borrower and their solicitor before completion, confirming the works already carried out on site were sufficient to commence the development lawfully, and that every condition had been signed off first.

£205k on day one against a site valued at £380k and the full £1.25m of development costs held and released in arrears against a monitoring surveyor’s inspections.

Personal guarantees were limited to 30% of the outstanding facility — reflecting the directors’ track record and the equity they hold personally. Third party investors funding the deposit and cashflow took no charge, and their funds were subordinated to ours by deed.

At £1.46m the total facility sat at 69% of a £2.56m gross development value, with the exit coming from the sale of the completed homes.

• Detailed planning already granted, with every pre-commencement condition discharged.
• Borrowers who were also the contractors, with forty years behind them.
• Development costs funded in full, released against inspection.
• Third party investor funds subordinated, so our charge ranked clear.