A professional property investor and portfolio landlord needed to raise against an unencumbered buy-to-let property held within a Special Purpose Vehicle (SPV). The funds were required to support a commercial-to-residential conversion project elsewhere within the portfolio. Although the property offered substantial equity and strong rental income, the challenge was structuring finance that balanced affordability, flexibility, and future portfolio growth.

Working closely with the client, Steve Verrell arranged a limited company buy-to-let mortgage that released capital from an existing asset without disrupting the wider portfolio strategy, providing the funding required to move forward with the conversion project.

Unlocking Capital Without Selling Assets

This type of scenario is increasingly common amongst experienced landlords. Many property investors hold significant levels of equity within their portfolios but prefer not to sell performing assets when opportunities arise.

In this case, the client owned a two-bedroom terraced buy-to-let property through a limited company SPV. Importantly, the property was mortgage-free, providing a valuable source of untapped capital.

The client's objective was straightforward: release capital to help fund the conversion of another property from commercial to residential use.

However, while the amount required represented only around 30% loan-to-value, lenders would still need to understand both the source and purpose of the funds.

Many landlords searching for how to raise money from a buy-to-let property to fund a property development project face similar challenges, particularly when borrowing through limited company structures.

Why Traditional Lending Approaches Were Not Always Suitable

At first glance, the case appeared relatively straightforward. The low loan-to-value ratio provided substantial security for lenders, and the property generated a healthy rental income.

However, lenders assess these transactions differently depending on the intended use of funds.

Traditional residential lenders were not suitable because the property was owned within a limited company SPV. Furthermore, some buy-to-let lenders take a more cautious approach when capital is being raised for development-related activities, particularly where commercial-to-residential conversion is involved.

Underwriters wanted to understand:

• The nature of the conversion project.
• The anticipated costs involved.
• The experience of the borrower.
• Whether sufficient contingency funds existed.
• The impact of the new borrowing on the portfolio's overall financial position.

Specialist lenders are often able to take a more pragmatic view in these situations, particularly where experienced portfolio landlords can demonstrate a clear investment strategy and a track record of managing property assets successfully.

Structuring the Finance

Working alongside the client, Steve Verrell reviewed both repayment and interest-only options.

One of the key considerations was balancing monthly cash flow against long-term borrowing costs.

A capital repayment structure would allow the debt to be fully repaid over the chosen 10-year term, gradually reducing leverage across the portfolio.

This approach appealed from a risk-management perspective and aligned with the client's preference to reduce borrowing over time.

However, an interest-only structure also offered significant advantages. Lower monthly payments would preserve cash flow and provide additional flexibility while the commercial-to-residential conversion project progressed. For many portfolio landlords, maintaining liquidity can be more valuable than aggressively reducing debt, particularly when multiple projects are underway simultaneously.

The final recommendation therefore involved presenting both options:

• The interest-only solution delivered a competitive five-year fixed rate, preserving working capital for the conversion project.
• The capital repayment alternative offered the same fixed rate but with monthly repayments, ensuring the debt would be fully cleared over the 10-year term.

The choice ultimately came down to the client's preferred balance between cash flow management and debt reduction.

The Importance of Development Funding Planning

Commercial-to-residential conversions continue to attract significant interest from investors due to the potential to create value through change-of-use opportunities.

However, one area that is often overlooked is how development costs are funded.

Traditional lenders often struggle to accommodate funding requirements that sit between investment finance and development finance. In some cases, bridging finance strategies may be appropriate. In others, raising capital against existing assets can provide a more cost-effective solution.

For this client, releasing equity from a mortgage-free buy-to-let property represented a significantly cheaper source of funding than many short-term development facilities. The low loan-to-value ratio also provided access to more competitive rates than would typically be available through higher-risk development lending.

This approach also avoided introducing additional complexity into the conversion project itself, allowing the development property to remain unencumbered while works progressed.

A Flexible Outcome That Supported Portfolio Growth

The recommended structure provided the client with access to the funds required while maintaining substantial equity within the security property.

The loan represented only a modest proportion of the property's value, ensuring strong lender security while giving the client the flexibility needed to move forward with their development plans.

Because the mortgage was arranged through the SPV structure already holding the property, the solution also aligned with the client's wider portfolio strategy and existing ownership arrangements.

As a result, the client was able to access development funding without selling assets, disrupting rental income streams, or introducing unnecessary financing complexity elsewhere within the portfolio.

Key Takeaways

What made this case possible was the combination of substantial equity, a strong rental asset, and a clearly defined purpose for the funds being raised. While some lenders view capital raising for development projects cautiously, specialist buy-to-let lenders are often willing to support experienced landlords where the overall risk profile remains sensible.

The case also highlights the importance of understanding how lenders assess SPV structures, portfolio income, and development-related borrowing. Different lenders apply very different underwriting approaches, particularly where funds are being used to support commercial-to-residential conversions or other value-add projects.



For landlords considering similar strategies, specialist advice can help identify whether capital raising, development finance, or bridging finance provides the most appropriate solution. The optimal structure is not always the one with the lowest interest rate; often it is the solution that best supports the wider investment strategy while preserving flexibility for future opportunities.