One of the more complex buy to let (BTL) cases to come across my desk recently involved an existing client who was the managing director of a design company, as well as a professional landlord with a large portfolio of over 30 properties. My client was a married, family man who wished to raise capital on on of his BTL properties so he could purchase another.
The property in question was in South London and had recently been valued at around £440,000; unusually, my client part-owned the freehold of this site and fully owned the leasehold, both of which were in his personal name.
Due to a number of factors, this case was not straightforward. Firstly, with both the freehold and leasehold being in my client’s name, there was potential for the lenders to perceive a conflict of interest. Usually, if payments are not met by the leaseholder to the freeholder, the leaseholder can be ejected, but as the leaseholder and freeholder were one and the same, I was wary lenders would approach this case with a degree of scepticism.
Furthermore, the number of properties my client already owned could have proven prohibitive as most high-street lenders would not think he was in a position to purchase a new property. My client had also reached his mortgage limit with a number of lenders for his BTL investments. On top of all this, his rental income was not strong enough on paper to achieve the value of mortgage he desired.
Approaching this case, I knew finding a lender with whom I already had a good relationship with was crucial to the case’s success. I was able to source one who was comfortable with my client’s level of BTL assets and with whom he only had one existing mortgage.
I was able to negotiate a 5-year fixed pay rate for my client, getting around the problem of lower than expected levels of BTL rental income and the lender was also happy with their unusual freehold and leasehold situation.
I arranged a rate of 3.39% over a 25-year term and was even able to arrange a free valuation of the property.