Vacant or between-tenants: why London commercial buyers use bridging

You have found a commercial unit in London. The location is right, the price is wrong in a good way. The seller has had it empty for six months, the asking price reflects that, and you can see a clear path to re-letting at a realistic rent.

The bank sees something different. It needs passing rent to demonstrate serviceability, and an empty building produces none. That is not a credit judgement on you or the asset; it is how term-lending models are built. The result is the same: decline.

A commercial bridging loan in London is the standard instrument for exactly this situation. The lender prices the deal against the property's capital value and your exit strategy, not a rent roll that does not yet exist.

Why a term mortgage won't work on an empty building

Commercial mortgages are income-underwritten. A mainstream lender looks at the interest coverage ratio: does the passing rent, divided by the mortgage interest, clear a minimum threshold? That threshold typically sits between 1.25x and 1.5x. With no tenant in place, the numerator is zero.

The bank is not wrong to apply that test; it is designed for a term product held for five, ten or twenty years. But it is the wrong instrument for a buying opportunity that hinges on the asset being empty now.

Vacant possession discounts on London commercial property can be significant: a shop unit between leases, a former office with planning for residential conversion, a small industrial unit recently vacated by a long-term occupier. The vacancy is the price opportunity, and it is precisely the thing that closes the door on term finance.

How a private lender underwrites a vacant commercial asset

Rikvin Capital lends against the asset and the exit, not the current income. For a vacant commercial property, the assessment centres on three questions: what is the property worth today on an open-market capital value basis; what is the most credible exit within the loan term; and does the borrower have the track record and resources to execute it?

Capital value matters because the loan is secured by a first charge against the property. HM Land Registry data, comparable transactions, and an independent RICS valuation feed into that figure. LTV is calculated on current value, not projected post-stabilisation value, so the numbers need to work at the price you are actually paying.

The exit is where a credible story has to hold up. If you are weighing a deal, speak with our team early: it helps to stress-test the exit before formal credit review rather than after. See how our lending process works for what that due-diligence sequence typically involves.

What a credible exit looks like

For a London commercial bridge, there are three common exit routes, each with different risk profiles.

Re-letting at ERV. Estimated rental value is the anchor. If the property is in a location with demonstrable demand at an ERV that supports a debt-service-covering rent for a refinancing lender, this is the most straightforward exit. The borrower secures the lease, income is established, and a term lender steps in. The risk: the letting takes longer than expected, or the agreed rent falls short of ERV.

Sale. Vacant possession can attract owner-occupiers who want to fit out to their own specification. For a trader rather than a hold investor, this is often the cleanest exit and the quickest to underwrite.

Permitted development or planning conversion. Some London commercial properties carry permitted development rights, office-to-residential being the most common. The exit may be a development lender, a residential mortgage once the conversion is complete, or a sale of the converted units. This path adds execution risk; a lender will want to see the PD certificate or planning consent in place, not just an intention to apply.

Any of these can support a commercial bridging loan in London, provided the timeline is realistic within the 3–24 month term and you can point to prior experience of the exit type you are planning.

When bridging fits the deal, and when it does not

Bridging is designed for a defined gap: between acquisition today and a tenanted, sold or refinanced asset at a near-term date. It is short-term by construction, and it costs more than a term facility. That cost is the price of speed and flexibility.

It is the right instrument when the commercial property is vacant or between leases and a term lender will not engage; when an off-market or lightly distressed London deal requires completion in two to four weeks; and when the borrower has a clear, time-bound exit that a term mortgage or disposal will deliver within the facility term.

It is not the right instrument when there is no credible exit plan within the term; when the acquisition is at full market value with no stabilisation upside to support refinancing; or when the holding strategy is long-term income with no near-term event. A bridge used as a term loan is a structural mismatch, and a lender underwriting it properly should say so.

Related: see how we financed a London investment property where the exit was a re-let followed by a term refinance. For mixed-use assets where a commercial element complicates the lender's classification, this guide on mixed-use property bridging covers the additional issues that mainstream lenders face. If your holding structure involves an SPV or offshore company, commercial real estate bridging for UK SPVs and trusts addresses the specific underwriting questions you will encounter.