Bridging Finance Unlocks Part-Tenanted Commercial Opportunity at Auction

Loan Amount:
£2,118,000

Property Value:
£3,025,000

LTV:
70%

Securing a commercial property at auction can be intense enough as it is. The deadlines involved mean property investors have to be on the ball from the get-go.

But when additional challenges are added into the mix, it can make an investment especially difficult. A borrower turned to us for an auction loan for a property that needed refurbishment work, and was also only partially tenanted.

Our underwriter got to work. They needed to ensure the purchase, refurbishment, and rental plan all came together for the borrower’s exit strategy.

Plans are in place

The property in question, despite being in a prime location, required extensive refurbishment works, which we ascertained would take several months to complete. Furthermore, the units within it were only partially tenanted, limiting its potential.

To ensure plans were in place to address these risks, we bore into the details. Our underwriter found that the borrower was already well into planning their refurbishment works, and we gathered evidence that confirmed they’d be completed in a timely manner. Also, we noted the borrower had commercial tenants lined up to fill the vacant units upon completion of the works.

With these issues addressed, it reassured us that the refinancing exit strategy was on a solid foundation. Indeed, seeing that their situation worked with a third-party lender that was willing to provide a long-term commercial loan, we delivered the funding required.

Getting ahead of legislation

With the Renters Rights Law coming into effect from May 1, some residential landlords may struggle to adapt over the coming months. We may see residential investors shift over to the commercial property market as they seek out easier ways forward.

Fortunately, we’re ready for this at Market Financial Solutions. Our bridging loans can be put towards a broad range of commercial property investments, and we recently reduced our commercial and semi-commercial BTL mortgage rates.

Ultimately, we have multiple options available to borrowers investing in residential, commercial, or mixed-use properties. We’ll strive to put our products to use in 2026 and beyond.

FAQs

Can I buy both residential and commercial properties at auction?

Generally, yes. It’s possible to find both residential and commercial properties at auction, as well as mixed-use assets. Although, what’s available may depend on the auction house involved. One may only offer homes, while another may solely deal with commercial lots. What’s available at each auction house will be clearly laid out on their websites ahead of time.

Why would I need to refurbish a property bought at auction?

Often, the types of properties found at auction are in a state of disrepair, or have been vacant for some time. As such, owners will want a quick exit, and this means the prices involved are lower than what’s found on the open market. These run down properties usually just need a bit of TLC to bring them back to life and increase their values, making them prime opportunities for investors willing to engage with a bit of a project.

What kind of documentation is required to show refurbishment plans are in the works?

Refurbishment, renovation, or conversion plans are usually detailed within a schedule of works. This is a detailed list of the tasks, costs, timeframes, and specifications involved in a project. It is the primary document used by lenders to assess cases, and our underwriters will comb through it as soon as possible. With specialist lenders, we will also need evidenced exit strategies.

How long do I have to complete an auction purchase?

Most auction houses have a 28-day deadline from the moment a winning bid is locked in. If a bidder fails to meet this deadline, they’ll not only lose the property but also lose their deposit, which can be around 10%. Deadlines and costs will vary between auction houses however, and so property investors will need to do their research ahead of time.