Landlord purchases off-plan house with newly set up SPV

Our client is an investment trader who lives and works in the City. He is also an experienced landlord with a portfolio of nine properties most of which are located in the North.

He approached us to help him find finance to complete the deal on a two-bed house which he had purchased off-plan two years ago. 

The house is located in a popular West Midlands town and is now ready for occupation. The client was looking to make the acquisition via his newly set up SPV limited company.

There were a couple of challenges with this deal:

  • The client approached us for finance in January and wanted to complete before 1st April so as not to incur the stamp duty surcharge – most lenders are currently under pressure dealing with an increase in applications all wanting to complete before the deadline.

  • The choice of finance is somewhat restricted as fewer lenders accept applications from SPV’s and some do not accept new build properties.

We suggested to the client that if he were to increase his deposit to 30% instead of 25%, we could speed up the application process by selecting a lender that could manage the timescales and offer a competitive rate of interest.

This was accepted by the
client and the lender offered the following terms within a month of application.

The deal is due to complete in March beating the stamp duty deadline.

Property value: £109,995

Loan amount: £76,500

LTV: 69%

Rate: 4.39% 2 year fixed

Term: 25 years

Borrower: SPV limited company

Lender arrangement fee: £750 

Mortgage payment: £280pcm

Rental income: £625pcm

Gross yield: 6.8% pa

Consultant: Gavin Elley, 01625 416398