Victorian House Conversion, Southgate

The developer, a qualified architect by profession but a first-time property developer, identified a dilapidated double-fronted Victorian house on a residential street in Southgate, N14. The property had been empty for over three years and required comprehensive renovation including a new roof, full rewiring, replumbing, structural underpinning to the rear wall, and a complete internal reconfiguration. The developer planned to convert the property into a two-bedroom ground-floor flat with private garden and a three-bedroom maisonette on the first and second floors.

Planning permission had been obtained for a single-storey rear extension and the conversion into two self-contained units, but the scheme was in a conservation area, which imposed additional requirements around external materials, window design, and the treatment of the front elevation. The conservation area status meant that the cost of external works was significantly higher than for a comparable project outside a designated area, as all replacement materials needed to match the original Victorian specifications.

As a first-time developer, securing finance was the primary challenge. Despite having relevant professional qualifications and a detailed understanding of the construction process, the developer had no track record of completing development projects. The relatively small loan size of 425,000 pounds also presented a challenge, as some specialist lenders have minimum facility sizes that would exclude a project of this scale.

We identified a lender from our panel that actively supported first-time developers on smaller refurbishment and conversion projects. The lender took particular comfort from the developer's professional background as a qualified architect, which demonstrated a level of technical competence and construction knowledge that most first-time developers lack. The appointment of an experienced local builder with specific experience of working in Southgate conservation areas further strengthened the application.

The finance was structured as a senior facility of 425,000 pounds at 65 percent of the total project cost of approximately 654,000 pounds. The rate was 0.89 percent per month with a 1.75 percent arrangement fee, reflecting the first-time developer premium but still representing competitive terms for a borrower with no previous development experience. The lender required a slightly higher contingency of 12.5 percent within the build budget and the appointment of a project monitoring surveyor to provide additional oversight.

We also introduced the developer to a Southgate-based solicitor experienced in conservation area transactions and a quantity surveyor familiar with the additional costs associated with heritage-quality refurbishment. This local professional team ensured that the transaction progressed smoothly and that the build costs accurately reflected the conservation area requirements.

The project was completed in 8 months, one month ahead of the 9-month facility term. The conservation area requirements added approximately 15 percent to the external works costs compared with a non-designated area, but this had been accurately reflected in the original budget thanks to the quantity surveyor's experience with similar projects. The overall build cost came in on budget, with the contingency remaining largely untouched apart from a minor unforeseen drainage issue discovered during the underpinning works.

The ground-floor flat was sold for 310,000 pounds and the first-floor maisonette for 475,000 pounds, giving total sales revenue of 785,000 pounds, slightly above the projected GDV of 780,000 pounds. Southgate continues to command premium residential values thanks to its Piccadilly line station, excellent schools, and village character, and the high-specification finish of both units attracted strong buyer interest from the outset.

The developer realised a net profit of approximately 95,000 pounds after all costs, representing a return on equity of 41 percent. More importantly, the successful completion of this project provided the developer with a credible track record, and we have since arranged finance for a second, larger conversion project in Winchmore Hill at improved terms of 70 percent LTC and 0.78 percent per month.