SPV purchases leasehold flat where freehold is owned by related party

The clients are two brothers who are successful London landlords and property developers.

They own the freehold of a block of flats within an SPV limited company. Having recently set up another SPV, they were looking to use it to purchase one of the leasehold flats within the block which had come up for sale.

Most lenders steer clear of this type of transaction because they prefer the freeholder and the leaseholder to be unrelated, so we approached a leading specialist buy to let lender which agreed the following terms.

Property value: £180,000

Loan amount: £135,000

LTV: 75%

Product: 3.75% 2 year fixed

Term: 20 years interest only

Mortgage payments: £422 pcm

Rental income: £1,100 pcm

Lender arrangement fee: 2% (£2,700)

Gross yield: 7.3% pa

Consultant: Steve Bedford

Consultant tel: 01732 471609

22nd July 2015