Urgent bridge finance for a quick completion on barn conversion while awaiting inheritance payout in Yorkshire
A family, amidst the complexities of going through probate, looked to finish a barn conversion on their family farm to generate an income as a holiday rental.
While the family had fairly substantial assets and anticipated a sizable inheritance sum, they were cash-light. They couldn’t finish a complex barn conversion that would otherwise unlock a rental income for the short term.
Unable to secure a loan against their family home, they sought a bridging finance solution to bridge the gap on the barn until the probate process concluded.
The family's barn, which had undergone partial conversion efforts, had an estimated value of £720,000 upon completion. However, the probate process delayed their access to the inheritance funds required to complete the project. They were eager to fast-track the remaining conversion work and move into their barn conversion.
With the probate process underway, the family knew they would inherit a sum of £700,000. However, this was likely to take at least a further 6 months. £200,000 as bridging finance (secured against the property) expedited the project's completion while awaiting the inheritance fund's release.
The property had an estimated value of £720,000, and the total finance requirement was £200,000, equating to a loan-to-value (LTV) ratio of 30%. The bridging finance allowed the family to promptly reengage with the same contractors, accelerate the conversion work, and purchase necessary materials for the fit-out.
A barn conversion involves updating agricultural or industrial structures, including barns, granaries, stables, and warehouses. These structures may have deteriorated or become outdated due to shifts in farming or manufacturing methods.
Bridging finance for barn conversions is a valuable form of multi-purpose short-term finance. Two of its many uses for barn conversions are the fast purchase of a site or raising additional funds quickly.
Rural locations: Barns are predominantly in rural or semi-rural areas, offering a serene and scenic environment. Appeals to tenants seeking a tranquil lifestyle away from the hustle and bustle of urban areas.
Demand for unique housing: Increasing desire for unique and unconventional housing options. Barn conversions cater to tenants seeking distinctive lifestyle homes, setting them apart from standard housing choices.
Potential for profit: Despite significant initial investment, successful barn conversions can substantially increase property value. It’s an attractive option for investors due to the potential for profitable returns.
Adaptability: Barns can be repurposed for diverse uses, including residential, commercial, or mixed-use spaces. It offers flexibility for investors to target different markets and adapt to evolving trends in the property sector.
Government incentives: In certain regions, planning authorities may discourage new construction and promote rejuvenation and preservation of existing structures. For example, converting under Class Q can be more straightforward than submitting a complete planning application, provided the existing building meets specific requirements.
Yorkshire, famed for its countryside, serves as a central industrial hub and is England's largest county, housing three of its largest cities.
Property prices: Yorkshire is an excellent place to reside and work, featuring property prices spanning from £135,019 in Hull to £320,683 in York. The wide range of prices demonstrates the opportunities, making it an attractive location for property investors.
Capital appreciation: Renowned for its affordable housing, Yorkshire consistently experiences annual growth. In the last year alone, it achieved a 1.2% increase, with a projected 28.2% rise in value by 2025.
Transport links: Located centrally in the UK, Yorkshire has accessibility to many major cities. Key road networks such as A1, A66, M1, and M62 connect Yorkshire to the rest of the country. Yorkshire also is close to five international airports and various ports. This accessibility enhances the county’s attractiveness for both residents and potential investors.
Due to the bridging finance, the completion of the barn conversion took less than 3 months, and the family was able to quickly let the property, generating a much-needed income while not compromising their financial stability. The inheritance funds, once released, were used to repay the bridging loan, marking the successful conclusion of this time-sensitive project.
This underscores the flexibility and adaptability of bridging finance solutions in facilitating time-sensitive property projects, ensuring that unique opportunities are not missed.