VAR directly funds a £3.5m land loan to unlock its development potential

A retired husband and wife required a quick alternative funding solution after being let down by a bank that did not honour its issued terms.

The requested £3.5 million loan was to be secured against a piece of land with outline planning permission for 53 new houses, valued at approximately £10 million. Because the mainstream lending market was unable to overcome complex restrictions on the land, traditional capital was unavailable. VAR Capital stepped in to provide a tailored solution funded by private client investors. This pragmatic approach allowed the borrowers to clear the restrictions making the sale difficult, meet their transaction deadlines, and successfully agree on terms of sale with a developer.

The clients are a retired husband and wife who had acquired a piece of land adjacent to their home 20 years prior.

The clients were recently granted outline planning permission to build 53 new houses on their land, resulting in a valuation of approximately £10 million.

However, there were a number of complex restrictions on the land which needed to be resolved to attract potential developers. Additional capital was required to resolve these specific issues, which was the primary purpose of the loan. The challenge intensified when the borrowers were let down by a bank that failed to honor the terms it had originally issued, forcing them to find a quick alternative funding solution to meet their deadlines.

Recognising these concerns, a Big Four accountancy firm introduced the client to VAR Capital.

The mainstream lending market was entirely unable to overcome the unique restrictions on the land. To resolve this gridlock, VAR Capital provided a tailored financing solution. The £3.5 million facility was funded directly by our private client investors, who were able to look past institutional hurdles and take a more pragmatic approach to underwriting the asset.

The lending solution successfully provided the borrowers with the exact funds they required to meet their deadline and remove the restrictions that were making a sale difficult.

With the encumbrances cleared, the borrowers have now agreed on terms of sale with a developer. The loan from VAR Capital enabled them to unlock the true value of the land and comfortably enjoy their retirement. Furthermore, upon the final repayment of the loan, the funding VAR Capital investor will make a significant return from a highly secure, low loan-to-value, asset-backed loan.