John Constant

Richard,
not all lenders have this policy where they don't accept income from a BTL portfolio towards a residential remortgage. Some are more enlightened than others.
Of course, this is all subject to other personal factors too. A good specialist BTL broker will know who to approach to enable you to release equity from your current residential property, where it can be used to fund a business, using your BTL income.
It is the kind of enquiry we at HD Consultants have successfully completed on many occasions. Feel free to contact me for a chat on 07751 042485.... Read More

Prath,
you should understand also that it is not so straight-forward for a First Time landlord to obtain a HMO mortgage - many lenders require you to have some experience with a "vanilla" BTL before tackling a HMO. This can be as little as 6 months or as long as 2 years with some lenders.

An experienced broker will be able to assist with your queries, whether it be for a standard BTL property or HMO. We would be delighted to help if you need it. Neil has our contact details.... Read More

In my client's situation, it would've raised a whole load of other problems regarding taxation costs etc. It would have been throwing the baby out with the bath water. As I said in my original post, I found a lender who accepted the AST value, rather than what the client actually received in his bank account.... Read More

You are quite right for this particular case Mark, but I wanted to draw your readers attention to the situation where a sole owner passed beneficial rental income to a spouse.
My client did this without fully considering the implications for the portfolio, and left himself pretty much high and dry.... Read More

Just a quick note regarding mortgages in this situation. It will not apply to you as such, but similar situations where there are more than 3 properties in the portfolio could leave yourself open to falling foul of the new portfolio income assessment calculations. I recently had a situation where a sole owner had given his wife beneficial ownership of 40% of the rental income. He asked us to remortgage a couple of the properties, but because he wasn't (personally) in receipt of the income, lenders were being ruled out because he didn't meet their portfolio income requirements. Fortunately, I did find one particular lender who accepted the AST value, rather than the received rental value and the day was saved. However, the rate was inferior to that he coud have expected to receive had he kept the full rental to himself.... Read More

Peter,
I suspect that the rules changing that you refer to are the PRA Portfolio rules. These are already in place and you will be pleased to know that you would not be classed as a Portfolio landlord, and therefore, will not be subject to the new regulations.

The new rule is that if you have 4 or more properties, the lender (and broker!) needs to undertake further financial diligence regarding the performance of the portfolio in the background - not just the property that you are seeking to buy.

What constitutes a "property?" Well, it includes holiday lets, properties owned through a limited company, ‘consent to let’ properties and all BTL mortgages owned solely or jointly by the applicant(s).

Alas, there is no easy rule of thumb here to see whether a portfolio is compliant. Every lender has their own method of assessing whether a portfolio is performing satisfactorily or not. Once you are a Portfolio landlord, you really do need the services of a good Mortgage Broker to guide you.... Read More

Hi Ian,
you mention in your text "over a period of time", so I assume that it has indeed been quite a while.

If this is the case, is there a rock solid reason why you still have it on a residential basis? I suspect that you are still on the lenders SVR, because the new lender seemed to be in the dark about your situation, until recently. Why not put a BTL mortgage the property? Do you need it on a repayment basis (if that's what it is on at present)? Have you considered Interest Only, as this is purely an investment property now? Chances are, you are probably paying more on a residential SVR than a good BTL rate. Swapping to a BTL mortgage would make the problem go away, and also give you a more appropriate form of borrowing.

If your intention is to keep the property on a repayment basis, you also have the option to take it on Interest Only, but make a monthly over-payment, thereby effectively keeping it as a repayment mortgage.

If you would like to chat through the options, please fee free to contact me.... Read More

Hi Julia,

Neil has pre-empted my comments here about problems with your lender, if you have one. Potentially, you could be breaking the T&C's of your current lender if you let like this. The lender entered into a contract with you that they would allow you to let your property for a maximum period at a time, albeit with a rolling extension. However, it still allows the lender to get the property back if you have not kept up the repayments on the mortgage, for example.

There are lenders who allow 5 year leases, but they are few and far between. If you need to investigate this further, please feel free to contact us via my personal link.... Read More

Hello Cheryl,
as advisers with a long-standing relationship with Property118.com, we would be happy to have an informal chat with you. You have identified that there maybe taxation issues and you were unsure if you needed an Accountant; we cannot give advice on taxation matters, but we would need to ensure that you have taken this advice if you were considering purchasing a property within a Ltd Company structure. There can be advantages to this approach, but it all depends on your personal circumstances, as Neil said.
It is likely that there are many other issues that need to be addressed, but this is not necessarily the best method to do so, so if you would like to speak to someone about this, please feel free to contact me via my personal link.... Read More

Yes, lenders would consider this in the same class as a new build.

Occasionally, some valuers (at the request of the lender) do "Desktop" valuations if there is a significant deposit. Valuers do not always visit the site.... Read More

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Would you be willing to give the address of the property? I would like to take a look at the area/building.... Read More

Christian, I would be very interested to hear why your lender(s) have refused to lend.

Have you spoken to any other reputable brokers who might be able to assist? We have worked closely with Property118 over the years on cases that have had their difficulties. We can't guarantee success, but we would be happy to have a look at the circumstances surrounding the case to see if a resolution of the situation can be found.... Read More

In addition to that mentioned above by Neil, a majority of lenders will also require a floating charge over the assets of your Ltd Co too. There are one or two lenders who do not have this requirement though.... Read More

To all those considering UKIP, speaking as a constituent of UKIP's only MP (or as was!) be careful what you wish for.

Many people in Clacton voted Conservative (Carswell) and got UKIP Carswell. Many people later voted UKIP (Carswell) and now have an Independent (Carswell).

I'm getting giddy trying to keep up!!... Read More

From a mortgage point of view, it would be much more attractive as a 1 bed flat, rather than a Studio. Studio's are not liked by many lenders, who view them as appealing to a limited number of potential purchasers. I think that you would find it more attractive to potential buyers later on down the line when you came to sell too.
However, be mindful of the comments of the previous poster re the legal position.... Read More

Ava, this is a question that has raised it's ugly head with us before. I (as a broker) have raised this with Paragon, and they seemed quite resigned to the fact that another company may have a floating charge over one of their properties and were quite laid back about it. However, let's look at the scenario that you find yourself in and perhaps apply some "what if's".

If you put yourself in the lender's shoes, they are being asked to lend maybe several hundred thousand pounds so that you can buy a property. Now, if it was me, I would want a cast iron guarantee that I would be able to get my money back if it all went wrong. Hence the need to secure the loan. As has already been pointed out, the first charge is the main security. This is going to be a Ltd Company purchase, and there remains the possibility that, if property prices fall dramatically, they may not get all of their money back. So they ask you to Personally Guarantee the loan as well. This means that they could take your personal possessions to settle the debt too, which would include your own residential property, assuming you have one. So this is a second line of defence for the lender.

Finally, if they have absolutely cleared you out as far as your personal possessions are concerned and they have taken the secured residence, the only other option would be to secure payment on other assets of the company, as it is the company that has borrowed the money.

Now it would be interesting to see what would happen if the entire portfolio is in peril of being repossessed; from what I gather from Paragon, that would be one for the solicitors to fight over; perhaps it may be down to the party who makes the first claim?

You are right to raise this point and to seek clarification from both lenders because, as I have said many times before, honest is the best policy.

From what I am aware of, Precise are the only lender who do not need a floating charge over the company assets. However, I can't believe that your lenders have not come across this before. Having said all of this, I suppose it's possible that Aldermore may have changed their wording recently, which has started the bells ringing with the solicitor.

If the wording is stating current and future assets, I guess that it doesn't matter which one completes first; it seems that Aldermore will be able to take action in any case.... Read More