Property Matters

In this section of our Hub you will find 'our property specific thoughts & considerations'. The information in this section is NOT mortgage advice, but covers a range of property related issues that we regularly discuss with clients. 

We appreciate there is a lot to consider and think about, so feel free to call us for a no pressure conversation about your options and what considerations will be relevant to you, or if we are here, why not Live chat us......

Initial Considerations

Many buy to let lenders take a bit more care when assessing the suitability of a property for buy to let / investment purposes.  This leads to slightly stricter criteria and increased likliehood of a physical valuation inspection.  We have detailed below some of the main property considerations that have been raised, and our experiences in dealing with them.

Non-Standard construction

Overage Clauses

Less than 6 months ownership

Selective Licencing

Knotweed

Flats & Leasehold

Titles & restrictions

The title is the legal document upon which the detail of the land and buildings are recorded.  The title also details any condistions or restrictions applicable to the land and buildings within the title.  The Title is the actual 'thing' that a lender takes security against (not just the physical bricks and mortar).  A lenders charge is then noted on the title.

The Title of a property has many aspect to consider for an investor.  The main considerations are detailed below.

Multiple dwellings on 1 single title.

Agricultural ties

Acreage

Overage Clauses

Section 157 & section 106 restrictions

Construction Types

The title is the legal document upon which the

 

 

Singlwe Skin

Concrete Block

Pre-Fab

Timber Framed

Steel Framed

Thatched

Listed

Defective pre fab

Location

The title is the legal document upon which the

 

 

Article 4 Areas

Selective Licencing

Flood Zone

Near / Above Commercial

Property Next Door

Property Types

The title is the legal document upon which the

 

 

Flats

New Build

Ex LA

Semi Commercial

Holiday Let

Air BnB

Lettability considerations

The title is the legal document upon which the

EPC (Future C)

EICR

COndition (lettable)

Damp

BMV

 

Licencing (hmo / selective)

Planning Consent (licence bu no planning)

General Considerations

The title is the legal document upon which the

 

Lender Exposure Limits

Flying Freehold

Solar Panels

Japanese Knotweed

Owned by seller for less than 6 months

Deposit Source

 

There is a lot of flexibility surrounding deposit sources for investing into a Ltd company.  The most common are:

  • Directors Loan (cash injection to the business directly from directors).

  • Equity (where the director owns equity in the property personally and transfers this equity to the company).

  • Gifted deposit - From family member to a director, who then places into the company by way of a directors loan.

  • Intercompany loan – A loan from one of the directors’ companies, to another.

There are other ways to fund your deposit, but remember all lenders have different views on the Deposit sources that are acceptable to them.   It is also worth bearing in mind that lenders and brokers are obliged to establish where the funds came from and evidence of the source of funds will always be required.

Property Near Commercial

Article 4 area

Deposit Source

 

There is a lot of flexibility surrounding deposit sources for investing into a Ltd company.  The most common are:

  • Directors Loan (cash injection to the business directly from directors).

  • Equity (where the director owns equity in the property personally and transfers this equity to the company).

  • Gifted deposit - From family member to a director, who then places into the company by way of a directors loan.

  • Intercompany loan – A loan from one of the directors’ companies, to another.

There are other ways to fund your deposit, but remember all lenders have different views on the Deposit sources that are acceptable to them.   It is also worth bearing in mind that lenders and brokers are obliged to establish where the funds came from and evidence of the source of funds will always be required.

Flying Freehold

Minimum EPC Rating

New-build

Single Skin brickwork

Agricultural Ties & Acreage

Multiple Kitchens & annexes

SIC Codes (Standard Industrial Classification)

Lender requirements for SIC Codes vary greatly.  Some limited company lenders will lend to a company with any SIC codes, but others are much more prescriptive, even going so far as checking that there were not previous SIC codes.  The most common for an SPV are:

68100 - Buying and selling of own real estate.

68209 - Other letting and operating of own or leased real estate.

68320 - Management of real estate on a fee or contract basis.

 

We do suggest that you discuss your companies SIC codes with your mortgage broker before purchasing properties so that you can maximise the lenders that will be available to you.

Title Restrictions

Other Considerations

There is lots to consider when setting up or purchasing into a limited company, we have added some more considerations below:

Lender Variations

Lenders vary greatly in so many aspects in addition to those noted above.  One example would be that there is a lender who will only allow one Ltd Company mortgage to them per client, so as some applicants do, you may have more than one SPV (maybe for different investing groups) this lender will not consider an application from any of your other companies, if one of your companies is mortgaged to them.   

 

Re-mortgaging / Rate Switching

Re-mortgaging to switch rates when a fixed or ‘initial deal’ rate has ended within a limited company can be a costly business due to the legal costs and higher set up fees some lenders apply.  Some lenders offer very good ‘product switch’ deals, but many still do not and your rate & options after the initial deal should always be a consideration when arranging your mortgage.