limited company student HMO

Limited Company Student HMO Investment with Foreign National Shareholder

29.10.19 | Written by: Charlie London

The Clients: An experienced, UK based HMO landlord was looking to go into partnership, via a new Limited Company, with an investor based in Singapore. The investor in Singapore didn’t own any UK property.

The Property: The clients were looking to invest in a newly refurbished, seven-bedroom HMO in an area of the South East, which was familiar to the UK investor and has a large student population.

The Finance: The pair wanted to purchase the HMO to make the most of the area’s abundant student market. The investor in Singapore was supplying the majority of the deposit for the purchase.

The Challenge: The clients wanted to form a Limited Company to purchase buy to let property, however, they had been turned away by several other brokers due to the foreign national not owning any UK property. 

The Solution: We knew that there are lenders that would be more than happy with the foreign investor being a shareholder of the limited company. Through working with the client and their professional tax adviser, the foreign investor agreed that he would be a minority shareholder (under 20%) in the company. 

The UK investor became the director of the limited company with 81% shares, and the Singaporean investor held the remaining 19%. Once this was agreed, we were able to approach a lender that was comfortable with the foreign investor being a minority shareholder. The lender would underwrite solely against the director and their shareholding. 

The pair were then able to purchase the HMO and start their property investment journey as a limited company. Here are the details:

Property value: £555,000

Loan amount: £416,250

LTV: 75%

Rate: 3.79%

Term:  5-year fixed, interest-only

Mortgage payment: £1340 per calendar month

Lender arrangement fee: 2% added to the loan.

Rental income: £3770 per calendar month

Gross yield: 8.1% per annum

Consultant: Charlie London, 01732 471604 

 

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If you would like to discuss any of the above points or have any questions around the matter, please feel free to contact me on my direct dial 01732 471604  or you can email me:  

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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