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Heavy refurbishment finance funds structural works, planning-required conversions, and changes of use that go beyond the scope of light refurbishment. It sits between light refurbishment finance and full ground-up development finance in terms of complexity and lender appetite.
Works requiring planning permission, building regulations approval, structural engineering sign-off, or party wall agreements are assessed as heavy refurbishment projects.
Heavy refurbishment facilities are typically arranged as short-term bridging loans of six to 18 months, with interest rolled up and repaid on completion of the works and sale or refinance of the property. Unlike full development finance, heavy refurbishment lenders do not always require a monitoring surveyor, though the most complex structural projects will require one to certify staged drawdowns.
Class MA permitted development rights, which allow the conversion of commercial, business, and service uses to residential without full planning permission, have created a significant market for heavy refurbishment finance. Former offices, retail units, and other commercial properties being converted to flats or houses require structural work, new services installations, and fire separation, all of which fall within heavy refurbishment criteria. Specialist lenders in this space understand the PD rights framework and can assess these conversions efficiently.
Heavy refurbishment lenders assess the project against the post-works value and the total project costs in a similar way to development finance lenders, but with a broader definition of eligible works and a simpler drawdown structure in most cases.
Heavy refurbishment lenders typically advance up to 70 to 75 percent of the post-works value. The post-works valuation is conducted by an independent RICS valuer who assesses what the property will be worth on completion of the works, based on the schedule of works and comparable evidence from the local market.
Lenders require evidence of the relevant planning consent, permitted development prior approval, or building regulations approval before advancing funds. For projects where planning consent has not yet been granted, some lenders will advance a smaller initial facility to cover purchase costs and fund the facility increase once consent is received.
| Work Type | Light Refurb | Heavy Refurb | Notes |
|---|---|---|---|
| Kitchen replacement | Yes | No | Like-for-like replacement without structural changes |
| Bathroom replacement | Yes | No | Like-for-like, no layout changes |
| Re-decoration throughout | Yes | No | Including plastering |
| New flooring | Yes | No | Including underfloor heating if non-structural |
| Re-roofing (like for like) | Yes | No | Same roof type, no extension |
| New windows and doors | Yes | No | Same openings, no structural work |
| Re-wiring and re-plumbing | Yes | No | Full replacement acceptable |
| Loft conversion | No | Yes | Structural works and planning (usually) |
| Extension | No | Yes | Planning permission required above PD limits |
| Change of use | No | Yes | Always requires planning consent |
| Structural wall removal | No | Yes | Structural engineer and building regs required |
| Basement conversion | No | Yes | Structural engineering and party wall required |
Heavy refurbishment finance covers a broad range of structural and planning-required works. The following are the most common project types we arrange finance for.
Converting a loft to habitable space typically requires structural alterations, building regulations approval, and in some cases planning permission where the extension exceeds permitted development limits or the property is in a conservation area. Heavy refurbishment finance covers the full cost of the conversion including structural works, dormer windows, staircase, and finishing.
Single and double-storey extensions requiring planning permission are funded under heavy refurbishment criteria. The facility covers planning costs, structural works, and finishing. The post-works valuation by an RICS valuer determines the maximum loan available.
Converting a commercial property to residential use, dividing a single house into multiple flats, or changing a property from one residential use class to another all fall within heavy refurbishment where the works involve structural changes or require planning permission. Class MA office-to-residential conversions under permitted development rights are a well-established product for specialist heavy refurbishment lenders.
Basement excavations and conversions are among the most complex and expensive refurbishment works. They require structural engineering, party wall agreements, and building regulations approval. Heavy refurbishment finance is available for basement projects but the lender panel is narrower and the due diligence more intensive than for simpler structural works.
We review the proposed scope of works, the planning status, and any structural engineering or party wall issues before approaching lenders. Understanding the works in detail allows us to identify the most appropriate lender market and avoid lenders whose criteria exclude the specific type of structural work involved.
The lender instructs an RICS valuer to assess the post-works value. For complex structural projects, the valuer may visit the site twice: once before works commence to assess the current value and the post-works opinion, and once on completion to confirm the works have been carried out as described in the schedule.
Heavy refurbishment credit decisions are more involved than light refurbishment decisions because of the structural risk and planning element. Lenders typically take five to ten working days to process a formal application. Cases with strong planning consent, a credible works schedule, and a clear exit route move through the fastest.
For simpler heavy refurbishment projects, the facility may be advanced as a single lump sum. For more complex structural projects with a longer build programme, the lender agrees a staged drawdown schedule with each tranche released against inspection by the borrower's professional team or a lender-appointed monitoring surveyor.
On completion of the works, the property is either sold or refinanced onto a long-term mortgage. We arrange the exit refinance alongside the heavy refurbishment facility so the exit is in place before the works commence. This avoids the risk of completing the works and then discovering the exit finance is not available on the terms expected.
Heavy refurbishment projects involve more risk and complexity than light refurbs. Here are some of the situations our advisers help investors and developers work through.
PD conversions are not full development projects in the same sense as a ground-up new build, and applying new build development finance criteria to them is overly restrictive. Specialist heavy refurbishment lenders understand the PD framework, assess PD conversions on their own merits, and can provide facilities at better rates and simpler terms than full development finance lenders.
Party wall agreements are a statutory requirement for certain structural works adjacent to a neighbouring property. Lenders understand that party wall processes take time and do not usually make party wall completion a pre-condition of facility drawdown, though most will require confirmation that the process has been initiated. We advise on how to structure the facility to allow works that are not affected by the party wall to proceed while the agreement is being concluded.
House-to-flat conversions often fall between two markets: too complex for standard bridging but too small for development finance lenders who focus on ground-up new build schemes. Specialist heavy refurbishment lenders are specifically set up for this type of project and can assess the facility on the post-conversion investment value of the individual flats.
Significant structural works on an existing building are not always a new build, but some lenders draw the line conservatively and apply development finance criteria to any project involving structural alterations. Identifying lenders whose definitions correctly reflect the nature of the project is the key step. We know which lenders have flexible definitions and which apply rigid boundaries between heavy refurbishment and development.
Speak to an adviser to discuss your circumstances and find out how we can help.
Clear,honest answers to the questions we hear most from clients and introducers.
You need to have either full planning permission, a prior approval certificate under permitted development rights, or at minimum a credible and advanced planning application before most heavy refurbishment lenders will offer a formal facility. Some lenders will advance a purchase or land facility before planning is secured and then increase the facility once consent is granted.
Yes. Most heavy refurbishment lenders will include architect fees, structural engineer fees, planning costs, and building regulations fees within the facility calculation. These are included in the total project cost schedule and funded as part of the facility, though they are typically the borrower’s responsibility to pay directly rather than being released as part of a construction drawdown.
Not always. Lenders typically require a monitoring surveyor for projects with a large scope of structural works, a staged drawdown structure, or where the developer is less experienced. For smaller heavy refurbishment projects where the lender has confidence in the borrower and the exit route is strong, a monitoring surveyor may not be required and the facility can be advanced as a single lump sum.
For a PD office-to-residential conversion, the post-works value is assessed on the basis of the completed residential units as if sold individually at open market prices. The valuer uses comparable residential sales in the immediate area to support the per-unit value, and the aggregate value of all units becomes the GDV. For a house converted to multiple flats, each flat is
valued individually and the aggregate forms the post-works value.
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