Purchase of shop and four flats by landlords with no commercial experience

We were approached by a broker whose clients were looking to purchase a semi-commercial property via a newly established SPV limited company.

The clients are both self-employed builders and part-time landlords. However neither applicant owns their own home or has any experience letting commercial space.

The property they were looking to purchase consists of a large ground floor shop and four two-bed flats above, which they intend to let to tenants in receipt of housing benefit.

The number of lenders willing to look at this case was restricted because the clients:

  • Planned to let the property to tenants in receipt of housing benefit
  • Had no experience in letting commercial property
  • Did not own their own homes
  • Wanted a loan facility over £500,000
  • Had only owned their buy to let properties for two years

Fortunately we were able to source finance from an intermediary only lender that was happy to accept the clients as they had experience in letting complex buy to let properties including large HMOs and multi-units.

Here are the details of the deal:

Property value: £770,000

Loan amount: £501,000

LTV: 65%

Borrower: SPV Ltd Co

Rate: 5.09% variable

Term: 10 years part interest & part repayment

Lender arrangement fee: 2% (£10,020)

Mortgage payment: £2,825 pcm

Rental income: £4,525 pcm

Gross yield: 7.1% pa 

Consultant: Gareth Richards

Consultant