Mixed-Use: Commercial + 6 Flats, Peckham

The Challenge

Our client identified a derelict two-storey commercial building on Rye Lane in Peckham with planning potential for a mixed-use scheme: a ground floor commercial unit suitable for a café or independent retailer, with six one- and two-bedroom flats above. The challenge was threefold. First, the building required demolition and rebuild rather than conversion, increasing costs. Second, the Peckham and Nunhead Area Action Plan required the ground floor to remain commercial, limiting the residential element that drives value. Third, the developer was relatively inexperienced, having completed only two smaller projects previously, making many mainstream lenders reluctant to fund the scheme.

Our Solution

We identified a specialist lender willing to back less experienced developers where the project fundamentals were strong. The Rye Lane location, with its proximity to Peckham Rye station and the area's strong gentrification trajectory, gave confidence in the exit values. We arranged £1.8 million at 68% LTC with a 16-month term. To address the developer's limited track record, we helped structure the project with an experienced project manager and a fixed-price design-and-build contract with a local contractor who had delivered similar schemes on Rye Lane. The lender took comfort from the fixed-price contract, the project manager's oversight, and the strength of the location.

The Outcome

The scheme completed on programme at 15 months. The ground floor commercial unit was let to an independent coffee roastery on a 10-year lease at £28,000 per annum prior to completion, adding value to the investment and demonstrating Peckham's commercial appeal. The six residential units sold at an average of £425,000 for two-bedroom flats and £340,000 for one-beds, achieving a total GDV of £3.2 million. The developer's net profit was £310,000 — a solid return that also established their credibility for future, larger projects.