A redundant care home in a residential area of Swindon. The building was solid, well-located, and ripe for conversion — but its commercial heritage and the change-of-use planning requirement meant that standard residential development lenders were cautious. The developer had identified the site as a planning gain opportunity: buy a commercial asset at a commercial price, convert to residential, and capture the value uplift. We arranged a £407,000 development finance facility to make it happen.
| Detail | |
|---|---|
| Finance type | Development finance — care home to residential conversion |
| Total facility | £407,000 |
| Site location | Swindon (residential area) |
| Purchase price | £190,000 |
| Land loan | £152,000 (80% of purchase) |
| Conversion facility | £255,000 |
| Developer contribution | £38,000 |
| Projected GDV | £570,000 |
| LTGDV | 71% |
| Profit on GDV | 23% |
| Planning route | Full planning — change of use C2 to C3 |
| Build programme | 6 months |
| Time to completion | 4 weeks |
A redundant care home is valued on a commercial basis — typically a low figure reflecting its limited alternative use as a commercial asset. The developer was buying at £190,000, reflecting the commercial value. But the completed residential scheme — four two-bedroom flats — had a projected GDV of £570,000. The £380,000 value uplift is the planning gain, but it only materialises after the conversion is complete. Development lenders need to be comfortable lending against the current commercial value of the asset while relying on the residential GDV for their exit.
Converting from C2 (residential institution) to C3 (residential) required full planning consent. The developer had submitted the application but consent was still pending when they first approached us. Most development lenders will not issue binding terms until planning is secured. The challenge was finding a lender willing to work with the developer during the planning wait — or moving fast enough once consent was granted to meet the developer's timeline.
At £407,000, this is at the smaller end of development finance — and many larger development lenders have minimum facility sizes of £500,000 or £750,000. The developer had been told by two lenders that the deal was "too small" for their development finance desk, despite the strong metrics. Finding a lender with the appetite for smaller development schemes — without paying premium rates — was a key part of the broker's role here.
We identified a lender that specialises in smaller development schemes (£250,000–£1 million) and has specific experience with commercial-to-residential conversions. This lender was comfortable with the commercial valuation of the care home as the security asset and the residential GDV as the exit — because that is exactly the type of deal they do. The £407,000 facility was well within their lending range, and the 71% LTGDV and 23% profit on GDV met their criteria comfortably.
Planning consent was secured during the first two weeks of our engagement — we had begun assembling the credit submission in parallel with the planning determination, so that the moment consent was granted, the submission could be lodged immediately. This parallel processing saved approximately two weeks compared to the sequential approach of waiting for planning before starting the finance process.
The planning consent included conditions around parking provision and bin storage — standard for flat conversions in Swindon. We included the cost of meeting these conditions (£15,000 for parking reconfiguration and bin store construction) in the conversion facility, ensuring the developer had sufficient funds to discharge all planning conditions without eating into contingency.
The £255,000 conversion facility was structured as: strip-out and demolition (£30,000), structural alterations including new doorways and partition walls (£45,000), M&E including new consumer units and rewiring (£55,000), plumbing and bathroom installations (£40,000), kitchen installations (£30,000), finishes and decoration (£25,000), external works including parking and bin store (£15,000), and contingency (£15,000). Each stage required monitoring surveyor certification before release.
💡 Key point on planning gain deals: The value in a commercial-to-residential conversion is in the planning, not the building. Buy at commercial value, secure residential planning, and the value uplift is created the day consent is granted — not when the conversion is finished. But your lender needs to understand both sides of the valuation: the commercial price you're paying today and the residential GDV you're building toward.
Planning consent granted mid-way through our engagement. Credit submission lodged same week including detailed cost breakdown, comparable flat sales in Swindon, and developer profile. Lender identified and terms agreed in principle.
Valuation completed on a desktop-plus-inspection basis. GDV confirmed at £570,000. Formal facility offer issued with staged drawdown schedule and planning condition discharge requirements. Legal work commenced.
Purchase completed. £152,000 land loan drawn. First conversion drawdown of £30,000 for strip-out released. Developer on site immediately.
"This developer bought a redundant care home for £190,000 and turned it into £570,000 of residential value. The conversion was straightforward — the real work was finding a lender who understood that the commercial purchase price and the residential GDV are two sides of the same deal. Most lenders saw a commercial building and walked away. We saw a planning gain opportunity and got it funded."
— MW Capital AdvisoryWhether it's a care home, office, pub, or school — if you've identified a commercial property with residential conversion potential, we know which lenders understand planning gain and will lend against the completed residential value. Speak to us before you commit.
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