These experienced landlords sought to diversify their portfolio by purchasing two properties on one loan for assisted living tenancies with a reputable charity. Despite lender caution over complex tenancy types, we secured a rate with a trusted bank, which quickly approved the application.
At a glance:
- Experienced landlord clients with a diverse portfolio of buy to let and commercial property
- Limited Company purchase of two properties on one application
- Properties to be used as assisted living in favour of a reputable charity
The Case:
Having worked with MFB for approximately 20 years, our experienced landlord clients have built up an impressive portfolio with a blend of standard and complex buy to let and commercial property investments. Given the scale of their property business, we regularly review their portfolio to ensure it’s running successfully and assist in finding new opportunities.
In light of increased borrowing costs, our clients, like many other landlords, were looking to diversify their portfolio further. In this case, our clients wanted to purchase two properties on one loan to let out to a reputable charity on an assisted living tenancy. While the properties were residential, the complex nature and tenancy type meant lenders would treat this as a commercial transaction.
The Challenge:
Although these types of tenancies can be extremely beneficial to landlords, given the ability to charge higher rents and favourable leases, many lenders will approach these applications with caution. The main concern is that the rent is not in the form of a standard AST and, therefore, requires specialist lending and enhanced due diligence not only on the borrower but also on the charity. Consequently, very few lenders currently offer these types of applications.
By mortgaging two properties on one facility, this case is classed as a portfolio loan. In addition to our clients’ substantial background portfolio, these details made the deal more complex, meaning many lenders could not accommodate our clients’ overall borrowing.
Given the complexity of this case and our thorough understanding of the clients’ circumstances, we dealt directly with a trusted bank with which we have an established relationship. We understand the criteria and capabilities within this market space, so we were confident that we could approach them with this case to find a solution.
MFB worked closely with the underwriters to settle any issues and give them better insight into our clients’ plans for the portfolio. With both our clients and the lender happy to proceed, we issued credit-backed terms within three days of the application being submitted.
The Finance:
Initial property value: £500,000
Loan amount: £375,000
LTV: 75%
Rate: 7.19%, 5-year fixed*
Term: 25 years, interest-only
Lender arrangement fee: 2% (£7,500)
Monthly rental income: £3,816
Gross yield: 9%
*Rate as at March 2024.
Next step
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