Buy to Let Case Studies

During the credit crunch many lenders withdrew from the buy to let arena making it difficult for property investors and landlords to borrow money. Lenders with available funds tightened policy and took advantage of their position to increase margins and fees.  Fortunately, over the last 12 months we have seen an easing of market conditions and witnessed the return of lenders into the buy to let space.  Detailed below are some recent case studies to help you get a feel for how the buy to let market is fairing today.

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• Raising capital on five unencumbered, self-contained flats on single freehold title (February 2011)

  09/02/2011

  I received an enquiry from a high street broker who was struggling to place a deal for a client who was seeking £150k against a single freehold property comprising five self-contained flats valued at £750k with rent of £3340 pm. The client had substantial outside income and required the funds to carry out work on one of his existing buy to let properties and fund the deposit for a further purchase. Our extensive database of specialist lenders indicated that one lender to which the wider market does not have access would be able to look at the deal and we are currently awaiting an offer.
   

• Exit provided for short-term bridging finance (February 2011)

  24/02/2011

  Experienced property investors purchased freehold property at auction using bridging finance. Bridging finance was used as the property was in need of refurbishment – the property was also split into two self-contained flats. We arranged the end funding to clear the bridging finance and recover the refurbishment costs.
   

• Reversion rate concern (March 2011)

  11/03/2011

  Buy to let portfolio client was fed up with being linked to either i) Standard Variable Rates controlled by the lenders or ii) 3 month LIBOR, which over the last few years has proved more volatile and more expensive than Base Rate!
   

• Business partner buys three new terraced houses (July 2011)

  25/07/2011

  Two business professionals formed a partnership to build a development of seven terraced houses. One partner wanted to buy three of the properties out of the partnership to add to his own portfolio. Due to lender concerns on risk exposure on one development, I arranged three separate mortgages with different lenders. The example below is for one of them.
   

• Finding finance for an ex-local authority flat on the sixth floor (September 2011)

  30/09/2011

  The client had bought the property six months before in cash. The flat had 60 years remaining on the lease and he was struggling to find finance in order to purchase another investment property despite the fact he had a tenant lined up ready to move in. We were able to help.

• BTL mortgage arranged in 5 days to release funds for further investment (September 2011)

  01/10/2011

  The applicant needed to raise a 75% mortgage on an unencumbered BTL property. Needed it completed within a week to take advantage of an investment opportunity. Application was received and agreed in principle on the same day. The surveyor visited the property the next day and got report back to the lender on the third day. The offer was then issued and on day five the money was in the client’s bank account.
   

• Refinance of freehold block of flats on interest-only basis (estimated November 2011)

  10/10/2011

  The client owns a freehold block comprising six self-contained flats all let on Assured Shorthold Tenancies.  Their high street bank was reluctant to renew existing facility and would only proceed on a capital and interest basis from the previously agreed interest only arrangement.  The lender also wanted to review the file every six months (and charge a fee!).  The client felt it would be better to switch lenders for the medium term and take advantage of the interest only option to preserve cash flow.

• Finance-raising secured on property for further purchase and to clear debts (October 2011)

  10/10/2011

  The client owns a buy to let property outright. She has no personal income except the rent (only about c£600 pcm) and £500 per quarter from another source. She has £50,000 of credit card debts and is looking to raise funds on the unencumbered property to clear her credit card debts and provide a deposit for a second buy to let property. She was struggling to find finance because of the small amount of personal income and the large amount of unsecured debt. We found a lender who could help.

• Purchase from directors’ to limited company to directors (October 2011)

  10/10/2011

  Three directors of a limited company which built two new houses a couple of years ago using a development facility wished to buy the properties from their own limited company for tax purposes but as the majority of buy to let lenders will not entertain this type of related transaction they approached us for assistance. I found a lender who is happy with this scenario and the transactions are now proceeding.

• Refinance for unencumbered ex-local authority flat

  09/01/2012

  The client was looking to raise capital to fund improvements on the flat and provide a deposit to purchase a further property. The case was submitted to the lender on 7th December 2011 and completed just 22 days later.