Prime Central London (PCL) has always evolved with the times, but the pace of change since 2020 has been exceptional. As hybrid work becomes the norm and corporate footprints shrink, developers are seizing opportunities to repurpose under-used office buildings into luxury apartments and boutique residences. These conversions — particularly across Mayfair, Marylebone, Knightsbridge and Belgravia — are breathing new life into commercial stock that no longer fits post-pandemic demand.
However, financing these projects in 2025 presents unique challenges. Traditional lenders remain cautious about mixed-use redevelopments and heritage properties, while construction costs and planning restrictions can quickly erode margins.
At Willow Private Finance, we’ve seen a sharp rise in clients seeking bespoke development funding for these conversions — often requiring layered finance solutions involving private banks, mezzanine lenders and family offices. This article explores how such projects are being structured, what lenders look for, and how experienced brokers can help navigate a complex funding landscape.
For background context, you might also read our recent piece: Financing Listed & Heritage Properties for HNW Buyers.
The prime London development scene is characterised by scarcity and selectivity. The City Fringe and West End have both seen a steady pipeline of Grade A offices replaced with smaller, ultra-prime residential schemes. Yet, regulatory scrutiny — from Westminster’s planning departments to conservation area controls — remains tight.
The Bank of England’s cautious rate path has kept senior lending margins relatively high compared to pre-2020 levels. Developers are typically looking at 65–70% loan-to-cost ratios, with private banks occasionally stretching higher for repeat clients with strong balance sheets. Bridging facilities continue to serve as a crucial first step before full development finance is released, particularly when acquisition and planning timelines overlap.
This environment has favoured borrowers who can demonstrate liquidity, experience, and the ability to deliver. Lenders are prioritising smaller, well-capitalised developers over speculative operators, often requiring robust exit strategies tied to either pre-sales or refinanced investment loans.
Financing an office-to-residential conversion is fundamentally about aligning three risk periods: acquisition, development, and exit.
At each stage, specialist brokers like Willow Private Finance play a key role in coordinating between valuers, quantity surveyors, and lenders to ensure smooth transitions and optimal leverage.
For further reading on short-term options, see: How Fast Can Bridging Finance Be Arranged?.
In 2025, lenders scrutinise four pillars before committing capital to PCL conversion schemes:
1. Developer Experience
Banks and private debt funds strongly prefer borrowers with a track record in delivering similar-scale projects. First-time developers may be considered only with strong professional teams and personal guarantees.
2. Planning Certainty
Planning permission remains the single largest risk variable. Full consent with minimal Section 106 obligations or heritage constraints can reduce interest margins by as much as 1%.
3. Viable Exit Route
A clear repayment plan — through unit sales or a refinance to investment terms — reassures lenders that capital can be recovered efficiently. Off-plan reservations are highly persuasive in underwriting committees.
4. Cost Transparency
Lenders want visibility across every aspect of the build — from main contractor contracts to contingencies and valuation reports. Most will now insist on an independent monitoring surveyor (IMS) before any drawdown.
Despite strong demand for prime residential conversions, several obstacles remain:
Experienced brokers mitigate these challenges by packaging applications that anticipate lender questions — ensuring valuations, planning consents and financial appraisals align from the outset.
Many PCL developers now rely on layered financing. A typical structure might include:
This blended approach optimises capital efficiency without excessive leverage, offering flexibility to pivot if market conditions shift mid-build.
Some lenders now offer pre-agreed exit facilities, allowing borrowers to switch seamlessly from development to investment finance. This reduces refinancing risk and improves cost predictability — especially useful for schemes aimed at long-term rental income.
Green financing continues to grow in relevance. Developments achieving BREEAM “Excellent” or EPC A ratings may qualify for modest rate discounts or extended loan terms, especially from ESG-focused funds.
A developer acquires a vacant office block in Marylebone for £7.5 million. Planning approval is granted for nine luxury apartments with retail at ground level. Using a combination of senior bank debt at 65% LTC and mezzanine finance for the balance, total project funding reaches £11 million.
Construction completes in 16 months, after which the developer refinances onto an investment facility with a private bank to retain three rental units. The remaining apartments are sold to international buyers, delivering a 22% IRR post-finance costs.
This illustrates how carefully structured finance, brokered through an experienced intermediary, can balance leverage and liquidity across the project lifecycle.
Prime Central London remains one of the most resilient markets globally, buoyed by international capital and chronic undersupply. As hybrid work and ESG retrofits reshape London’s commercial footprint, the office-to-residential model will likely accelerate.
For developers, the key to success lies not just in sourcing capital but in orchestrating it — ensuring that every funding component, from acquisition to exit, aligns with lender expectations and market timing.
At Willow Private Finance, we specialise in structuring complex, high-value finance solutions for prime London conversions. Our team has extensive experience arranging layered facilities with private banks, development funds, and family offices, ensuring clients access competitive leverage with minimal friction.
Whether you’re refinancing a part-completed scheme or planning a new acquisition, our whole-of-market approach ensures every lender option is explored — from traditional senior debt to bespoke mezzanine and bridging arrangements.
Q1: How much leverage can I obtain for an office-to-residential conversion in 2025?
A: Most private banks and specialist lenders offer up to 65–70% loan-to-cost, with mezzanine finance potentially extending this to 80% depending on project and borrower profile.
Q2: Are planning-pending acquisitions financeable?
A: Yes, but usually through short-term bridging facilities. Lenders will assess the likelihood of planning approval before committing to full development finance.
Q3: Can I include soft costs like professional fees in my loan?
A: Many lenders allow a portion of professional fees and interest to be rolled into the facility, provided total costs remain within agreed loan-to-cost limits.
Q4: What type of borrower profile do lenders prefer for conversions?
A: Track record is key. Developers with prior experience in similar projects, adequate liquidity, and a credible exit plan receive the most favourable terms.
Q5: How long does it take to arrange development finance?
A: Typically 4–8 weeks from submission, depending on valuation, planning documentation, and lender underwriting capacity.
Q6: Are ESG or sustainability criteria affecting lender appetite?
A: Increasingly, yes. Projects targeting high energy performance standards or carbon reductions can attract more favourable terms from select lenders.
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About the Author
Wesley Ranger is the Director of Willow Private Finance and has over 20 years of experience in property finance. He specialises in high-value and complex mortgage cases, helping clients across the UK and internationally secure tailored lending solutions — from private banking and development finance to complex multi-currency arrangements.
Important Notice
This article is for general information purposes only and does not constitute personal financial advice. Mortgage product availability, eligibility, and rates depend on your individual circumstances and may change at any time.
Always seek tailored advice before committing to any financial arrangement.
Willow Private Finance Ltd is authorised and regulated by the Financial Conduct Authority (FCA No. 588422). Registered in England and Wales.
