Property in need of TLC! (November 2009)

This landlord contacted us via the internet as he needed assistance in purchasing a purpose built flat, in a good location, in need of some refurbishment to make it habitable.  He had sufficient capital to fund the work but didn't want to tie up all of his cash long term.

The challenge for us was to find a lender prepared to fund the initial purchase even though the property was not in a let-able condition.  Over recent times the buy to let market providers have shied away from this type of transaction, which has forced these deals into the more expensive commercial / development sector.

The key issues addressed by the broker were as follows:
- Property not yet ready to let
- Further advance

We negotiated the following funding for the purchase:
Scheme: 4.19% fixed for 1-year
Purchase Price: £225,000
Loan amount: £157,500 (70% LTV)

Cost of refurbishment: £10,000 - new kitchen, new bathroom & redecoration
Value after works: £240,000
Loan release after works based on 70% of enhanced value: £10,500