Croydon Development Finance: 1 Unit Residential HMO Conversion at 57 Tankerton Terrace Mitcham Road Croydon CR0 Enters the Pipeline

A new application at 57 Tankerton Terrace, Mitcham Road, Croydon CR0 3HL has joined the borough's residential pipeline. Application 26/02057/FUL is listed as pending decision on the London Borough of Croydon planning register, and it is a compact but typical example of the small conversion schemes our desk sees week in, week out across the borough.

The application

The proposal covers three linked pieces of work: a single storey rear extension, a roof extension comprising a rear dormer and 2 front rooflights, and a change of use from a dwellinghouse (Use Class C3) to a small House in Multiple Occupation for a maximum of 6 occupants (Use Class C4). The Croydon planning register records 1 unit proposed, and our own estimate puts the gross development value at around £415,000 once the works are complete and the property is let as a 6 bed HMO.

It is a residential use class throughout. There is no commercial element, no affordable housing trigger and no new dwelling being created, which keeps the planning risk relatively low compared with a ground-up scheme. The application still has to be determined, and Croydon has an Article 4 direction in place for HMO conversions, which is exactly why a full application is needed here rather than permitted development.

Where it sits in the Croydon pipeline

Small HMO conversions of this type make up a meaningful share of the residential applications we track in Croydon. The borough has strong rental demand from commuters, students and key workers, and the Mitcham Road corridor is well served by tram and bus links into central Croydon. For an investor, the maths on a 6 occupant C4 property usually stacks better than a single let, which is why we keep seeing these schemes come forward.

The finance angle

A project like this rarely needs a full development facility. What it typically needs is a refurbishment bridge or light development loan to fund the purchase (or refinance) plus the extension, dormer and internal reconfiguration works, followed by a term exit onto a specialist HMO buy to let product.

On a £415,000 end value, specialist bridging lenders will normally lend against the day one value with works funded in arrears, and the total facility is usually capped at 70 to 75 per cent of GDV. The exit is the part that matters most. Challenger banks and specialist commercial lenders that offer HMO term products will want to see the C4 consent granted, the works signed off, and the property either let or with a clear letting strategy before they release the long-term money.

We cover the local lender appetite, typical rates and worked examples on our Croydon development finance page, and the pattern for this scheme follows that guidance closely.

Our read as brokers

If we were advising the sponsor on this application, we would be lining up three things now rather than waiting for the decision notice.

First, a costed schedule of works from a contractor so the bridging lender can size the works element properly. Second, a valuation instruction that reports both the current C3 value and the projected C4 investment value, because the gap between the two is what the exit lender underwrites. Third, evidence of the HMO licence route with Croydon Council, since a term lender will not complete without it.

A decision on 26/02057/FUL is still awaited. Once consent lands, the sponsor should expect the bridge to be in place within four to six weeks if the paperwork above is ready, with the term refinance following once the rooms are let.