£15.6m of Development Finance Is Turning Two Redundant London Buildings Into 92 Supported-Living Units

United Trust Bank has provided two development facilities totalling £15.6m to Public Housing Ltd, funding the acquisition, refinancing and redevelopment of two redundant South West London properties into 92 en-suite supported-living units. The schemes have a combined gross development value of £26.5m.

The transaction is significant for more than its size. It shows how a building that has become redundant in its existing form can acquire a very different development and financing proposition when the proposed use, planning position, development team, funding structure and exit align.

It also illustrates that the finance required by a development project can change as the asset progresses. One of the schemes is moving from an existing bridging facility into a £6.5m development loan that will both refinance the bridge and fund the conversion works. For developers already holding assets on short-term debt, that progression can be particularly relevant.

The Important Story Is the Change of Use in the Capital

Development finance is often discussed in terms of new-build housing: acquire land, obtain planning, build the units and repay the development facility through sales or refinance. These transactions demonstrate another part of the market — the repositioning of existing institutional property.

A former care home and a former convent are fundamentally different assets from a conventional residential development site. Their existing layouts, construction, planning history and potential alternative uses all affect how a lender assesses the security. The development proposition therefore depends on more than the property's current vacant possession value.

UTB's funding is supporting the transformation of those buildings into specialist accommodation for vulnerable adults. In the first scheme, the existing building footprint will be used to create 28 en-suite units alongside counselling rooms, communal breakout areas and shared facilities. The second will deliver 64 en-suite units with shared kitchens, communal areas and dedicated space for 24-hour support staff. :contentReference[oaicite:0]{index=0}

For owners of redundant institutional assets, the wider point is that the value and financeability of a building can change materially if there is a credible alternative use and a deliverable route to achieving it.

One Scheme Shows the Bridge-to-Development Finance Sequence

The £6.5m facility is particularly instructive because part of the loan is being used to refinance an existing bridging facility while also providing development funding for the conversion.

Bridging and development finance perform different functions. A bridge can be useful when an investor needs to acquire or retain control of a property before the full development proposition is ready for conventional development debt. This might occur while planning, design, professional reports, costings or other project elements are being finalised.

Once the scheme reaches a point where a development lender can underwrite the project in detail, the capital structure can change. A development facility may refinance the bridge and provide staged funding for the works, subject to the lender's conditions and drawdown mechanics.

How a Bridge Can Progress Into Development Finance

The Second Scheme Has a Different Risk Profile

The £9.1m facility is funding the acquisition and conversion of a former convent into 64 en-suite supported-living units over a 24-month term. UTB states that no change to the existing planning consent is required, reducing one element of planning risk. :contentReference[oaicite:1]{index=1}

That distinction matters. Planning risk can materially affect both the timetable and certainty of a development project. Where a borrower is purchasing an asset dependent on securing a new consent, the lender needs to understand what happens if the consent is delayed, altered or refused.

A scheme capable of progressing within an existing consent does not become risk-free. Construction, cost inflation, valuation, operator, revenue and exit risks remain. However, removing a major planning dependency can materially change the overall underwriting proposition.

Supported Housing Has a Genuine Demand Story

The demand backdrop is substantial. The Government's Supported Housing Review estimates that Great Britain had approximately 634,000 supported-housing units in 2023. It estimated that between 179,600 and 388,100 additional units would have been required to address existing unmet demand at that point. :contentReference[oaicite:2]{index=2}

The research also found that 86% of local authority and county council commissioners surveyed expected supported-housing demand in their area to increase during the following five years. Only 8% indicated that, in their opinion, there was no unmet need locally, while more than half reported some or substantial unmet demand. :contentReference[oaicite:3]{index=3}

Those figures help explain why experienced developers and specialist lenders are interested in the sector. They do not, however, establish that every proposed supported-living scheme has a viable local market or sustainable operating model.

Demand Alone Does Not Make a Development Financeable

National shortages can support the strategic rationale for new accommodation, but lenders finance individual schemes rather than national statistics.

The Government's own research emphasises the complexity of the supported-housing sector. Client groups, provider types, commissioning models, funding mechanisms and local circumstances vary substantially, while the review identifies long-term funding constraints, unreliable revenue streams, planning barriers and the limited availability of suitable properties among the challenges facing new provision. :contentReference[oaicite:4]{index=4}

A developer therefore needs to demonstrate why the proposed accommodation works in its particular location, who will operate it, how the scheme will function commercially and how the development lender will ultimately be repaid.

This is an important distinction for property investors entering specialist accommodation for the first time. A headline shortage of units is not a substitute for local demand evidence, a credible operating model or a properly constructed development appraisal.

What Will a Development Lender Want to Understand?

Every transaction is different, but the underwriting process for a substantial conversion can extend well beyond a conventional assessment of purchase price and build cost.

Operator Risk Can Be Central to the Finance Case

Supported living is not simply a residential conversion with a different label. The intended accommodation, support provision and operating structure can be integral to the value and long-term viability of the completed asset.

Where a development exit relies on investment value or long-term refinance, the lender may need to understand who will operate or occupy the scheme, the nature and durability of the income, and whether the completed asset has a credible market beyond the development phase.

That does not mean the development lender becomes responsible for validating every aspect of the care or support model. Those specialist matters remain with the relevant professional, operational and regulatory advisers. It does mean that a weak or unclear operating proposition can undermine an otherwise attractive property development.

For borrowers, the practical implication is that property strategy and operational strategy cannot always be developed independently and joined together shortly before funding is required.

The Capital Stack Has to Support the Whole Project

A £15m development transaction is rarely just a question of identifying a lender prepared to quote a headline loan amount. The borrower needs sufficient equity, an appropriate facility structure, contingency for cost overruns and enough liquidity to deal with expenditure that falls outside lender-funded costs.

The lender also needs to be comfortable with the amount of debt relative to the acquisition price, development cost and projected completed value. How and when the facility is drawn can be just as important as its total size.

On multi-stage projects, developers should therefore model the cash requirement throughout the scheme rather than focusing only on the maximum facility. A project can have an apparently adequate loan-to-GDV position and still encounter a cash-flow problem if the timing of equity, VAT, professional costs or lender drawdowns is misunderstood.

Why the Existing Bridge Needs to Be Considered Early

Developers holding property on bridging finance have an additional timing constraint. The existing facility has a maturity date and its own extension terms, interest costs and covenants.

If development finance is intended to repay that bridge, the refinance should not be treated as something to arrange only once construction is ready to begin. The incoming lender will need time for valuation, legal due diligence, technical review and credit approval.

Any uncertainty around planning, costs, title, borrower equity or the development exit can extend that process. Starting too late can leave a developer negotiating a bridge extension while simultaneously trying to satisfy the new lender's conditions.

The first UTB scheme provides a useful real-world example of the intended sequence working: an existing bridge is refinanced by the development facility as the property moves into its conversion phase. :contentReference[oaicite:5]{index=5}

What If the Existing Building Is Difficult to Sell?

Redundant institutional buildings can be challenging assets. A former care home, school, convent, office or similar property may have a relatively narrow pool of buyers if marketed solely for its existing use.

That does not necessarily mean the building lacks development potential. Its alternative-use value may depend on planning, configuration, local demand, conversion cost and the viability of the completed asset.

For an owner considering disposal, understanding potential development finance can therefore matter before the property reaches the market. A purchaser capable of financing a conversion may view the asset very differently from an occupier assessing it solely in its existing form.

This is where planning consultants, specialist property agents, architects and finance advisers can become involved at an earlier stage. The development proposition may begin long before a formal loan application exists.

Conversion Finance Is Not the Same as Ground-Up Development

Existing buildings can reduce certain risks while introducing others. A developer may avoid some of the groundwork associated with a new-build scheme, but the condition and configuration of the existing structure can create uncertainty.

Hidden defects, asbestos, building-services replacement, structural alterations, fire-safety works and unexpected construction issues can all affect the cost plan. The lender and monitoring surveyor will therefore want a credible budget and appropriate contingency.

The more specialist the proposed use, the more important it becomes to establish that the specification is appropriate before costs are fixed. Changes made after works begin can affect both budget and programme.

An experienced professional team is therefore particularly valuable on conversion schemes, where the development is working with the constraints of an existing building rather than starting with a clear site.

Planning Certainty Can Change the Funding Proposition

The second UTB scheme highlights this point directly. The former convent conversion does not require a change to the existing planning consent, which UTB identifies as reducing planning risk. :contentReference[oaicite:6]{index=6}

For lenders, greater planning certainty can make it easier to assess when works can begin, what is actually being delivered and whether the projected development timetable is realistic.

For borrowers, it can also reduce the period during which capital is tied up in an asset that cannot yet move into development.

Planning status is therefore not merely a technical matter for the planning consultant. It can affect leverage, lender choice, loan term, interest cost and the amount of contingency the borrower needs to carry.

The Exit Needs to Be Considered Before the Development Loan Starts

Development lenders are short- to medium-term capital providers. Their decision is partly based on whether there is a credible route for repayment when the project completes.

For a conventional residential scheme, the exit might be individual unit sales. For supported living, the exit can be more specialised. Depending on the scheme, it might involve sale to an investor, retention and investment refinance, or another agreed strategy.

If the exit relies on long-term ownership, the finance discussion moves beyond construction. The completed asset's valuation methodology, income profile, operator arrangements and long-term lender universe may all become relevant.

A developer should therefore avoid assuming that a successful development facility automatically guarantees an investment refinance. The proposed exit needs to be tested against the likely completed asset from the beginning.

Supported Housing Funding Models Are Complex

The Government's Supported Housing Review describes a fragmented sector with different provider types, commissioning arrangements and funding mechanisms across Great Britain. Approximately 38% of supported housing identified in the research was commissioned and funded by local authorities or statutory bodies to cover some or all of the costs of care, support or supervision. :contentReference[oaicite:7]{index=7}

The research also warns that long-term funding constraints and unreliable revenue streams can restrict new development. Procurement and commissioning practices vary, and the review notes that not all additional supply necessarily meets local need. :contentReference[oaicite:8]{index=8}

That complexity matters when considering a development because the property, support service and revenue structure can interact. Borrowers should obtain specialist legal, tax, planning, regulatory and operational advice relevant to their proposed model.

A finance adviser should not attempt to replace those disciplines. The financing role is to understand the proposed structure sufficiently to identify whether lenders are likely to fund it and what evidence they will require.

What Should a Supported-Living Development Finance Review Include?

A useful funding review should start before the borrower asks lenders for terms. The objective is to establish whether the proposed capital stack matches the actual property strategy.

The Same Asset Can Create More Than One Finance Requirement

The UTB transaction illustrates why development finance should sometimes be considered as a sequence rather than a single loan.

An investor may first require acquisition bridging. The project can then move into development finance. Once completed and stabilised, a third facility may be required to refinance the development debt into longer-term investment borrowing.

Those stages should not be planned in isolation. Decisions made when arranging the bridge can affect the development refinance, while the development structure can influence the eventual investment exit.

For a substantial supported-living conversion, establishing the likely financing journey at acquisition can reduce the risk of reaching a later stage with an asset that does not fit the next lender's requirements.

Why This Matters Beyond Supported Living

The underlying financing principle applies to many redundant commercial and institutional properties.

Former care homes, nursing homes, offices, schools, religious buildings, hotels and other specialist assets can all reach a point where their existing use no longer represents their strongest development proposition.

Conversion may create a viable alternative, but the lender needs evidence that the new use can actually be delivered. Planning, construction, valuation, demand and exit therefore become connected components of the same credit case.

The question for the owner is not simply, “What is this redundant building worth today?” It may also be, “What could this building become, what would that cost, and can the capital structure finance the transition?”

How Willow Private Finance Can Help

Willow Private Finance works with developers, investors and property businesses requiring specialist development, bridging and structured property finance.

For supported-living and other complex conversion schemes, we can assess the proposed funding requirement across the entire project rather than viewing the acquisition, development and exit as unrelated transactions.

That can include reviewing an existing bridging facility, development costs, borrower equity, projected valuation, required senior debt, proposed term and the intended refinance or disposal strategy before approaching appropriate lenders.

Where a scheme involves specialist accommodation, the borrower should retain appropriately qualified planning, legal, tax, valuation, operational and regulatory advisers. Willow's role is to establish whether the financing structure is capable of supporting the property strategy they have developed.