Harper James advises UK businesses on commercial property finance under the laws of England and Wales, including acquisitions, refinancing, development funding and lender security. Commercial property finance is the process of arranging borrowing to purchase, develop, refinance or release capital from property used for business purposes.
The appropriate facility depends on the property, its intended use and the borrower’s financial position. Common structures include commercial mortgages for acquisitions, bridging loans for short-term funding, development finance for construction projects, and refinancing facilities to replace existing debt or release equity. The borrower should assess the loan-to-value ratio, interest rate, term, arrangement fees, repayment method and any early repayment charges. Development finance also requires a review of the build costs, planning position, construction contract, projected sales or rental income and contingency funding.
A lender normally assesses the borrower’s accounts, cash flow, business plan and experience, alongside an independent valuation of the property. The valuation considers market value, rental income, occupancy, condition and the property’s permitted use. Legal due diligence covers title, rights of way, restrictive covenants, planning permissions, environmental matters, building regulations, asbestos records and existing occupational leases. Missing documents or unresolved title issues often delay approval and completion.
The lender generally takes a legal charge over the property, registered at HM Land Registry. Other security includes a debenture over a company’s assets, personal or group company guarantees, assignments of rental income and security over shares in a property-owning company. The facility agreement sets out the advance, interest, repayment dates, financial covenants, information requirements and events of default. A borrower should understand restrictions on additional borrowing, property disposals, changes in ownership, alterations and leasing arrangements before signing.
Before completion, the parties settle the loan agreement, security documents, certificates, insurance arrangements and any required planning or construction evidence. The solicitor confirms that conditions precedent are satisfied and registers the lender’s charge after completion. During the loan term, the borrower must meet repayment and interest obligations, maintain insurance, pay property taxes and comply with financial and property-related covenants. A breach can trigger default interest, enforcement rights or a demand for early repayment, so refinancing and covenant monitoring form part of the finance plan rather than an afterthought.