The situation
An investor owns a commercial building comprising three units. Two are let, while the third became vacant recently. They want to refinance an existing facility and may use part of their own cash for improvements to attract a new tenant.
What makes this more involved?
The advertised market rent for the vacant unit is not current income. Lease expiries, break clauses, incentives and tenant strength can affect valuation and lending. Refurbishment costs and the void period need to be funded realistically.
How I would approach it
Review the leases
Reconcile signed terms, actual receipts, arrears, incentives and upcoming lease events. Confirm the landlord’s liabilities for repairs and other property costs.
Assess the vacant space
Obtain relevant professional advice on condition, use and letting prospects. Keep proposed rent and signed commitments separate in the funding brief.
Compare refinance structures
Research the actual occupied position, borrower experience and debt service. Consider whether reducing debt or waiting for a sustainable letting improves the options.
What could change the plan?
Can the vacant unit be counted as fully let?
No. The lender and valuer need the true occupancy position and will decide how to assess any potential rent.
What if a tenant has a near-term break option?
That may affect the certainty of income. The application should identify it rather than relying only on the headline lease end date.
What this would establish
Present a transparent income and property brief and assess whether the refinance is supportable during the current void.
Does market rent equal cash available for debt payments?
No. Actual rent, vacancies, incentives, costs and lender assessment all need to be considered.
Link to this answerEducational content reviewed 9 October 2026. Individual advice requires an assessment. Lender and policy criteria can change.
Further reading: MoneyHelper: buying a home. These references provide background information; they do not indicate acceptance of this example.