"flats above shops" mortgage

[Kudos]

Hi,

Has anyone had any experience in raising finance for property which is over a commercial unit?

I have developed a building which has 4 apartments over a café seating area. Very little noise generated by the café, and certainly none in the apartment above. Completely seperate entrances to apartments/shop.

I’d like to refinance, but believe this is not overly appealing to too many finance houses!

Thanks

[Sarnie]

Do you own the Cafe?

[Kudos]

Sarnie said:

Do you own the Cafe?

The property, yes. The cafe has been leased to someone (who's been there running it for 15+Yrs)

[New POD]

That much maligned 'homeless' charity Shelter, reckons that there are 250K spaces sitting empty above shops, which could be converted into homes, and personally, anyone that takes the trouble to bring those spaces into use gets my Karma. Can't help on the finance, but good luck and well done getting this far.

[Sarnie]

Kudos said:

The property, yes. The cafe has been leased to someone (who's been there running it for 15+Yrs)

Are the properties on separate titles etc?

If they are, then it's possible. Some lenders will have specific criteria that states that they won't lend where the property is above a commercial unit, of those that don't, they will all state that it will be subject to the valuers comments. Which effectively means that if the valuer deems that the commercial unit underneath, next to and opposite, have negative impacts on the saleability of the property, then it will either bring down the valuation figure or even decline outright to lend.

[caprirob]

Flats over commercial property is quite do-able with many lenders but flats over any sort of restaurant outlet have always been notoriously tricky to place.

I think the only one I ever successfully placed above a food outlet was with Natwest but that was a looooooong time ago pre credit-crunch.

[pacoryan]

As Sarnie says it can be done but the majority of lenders take a dim view of food outlets due to the smell/noise/fire risk that can have a negative impact on the value. Might be easier to be considered as a single Commercial project rather than multiple BTL's?

[NatAsp]

caprirob said:

Flats over commercial property is quite do-able with many lenders but flats over any sort of restaurant outlet have always been notoriously tricky to place.

I think the only one I ever successfully placed above a food outlet was with Natwest but that was a looooooong time ago pre credit-crunch.

I'm told Natwest'll still do these.

[Kudos]

Sarnie said:

Are the properties on separate titles etc?

If they are, then it's possible. Some lenders will have specific criteria that states that they won't lend where the property is above a commercial unit, of those that don't, they will all state that it will be subject to the valuers comments. Which effectively means that if the valuer deems that the commercial unit underneath, next to and opposite, have negative impacts on the saleability of the property, then it will either bring down the valuation figure or even decline outright to lend.

I thought I replied back to this last night, it clearly didn't post.

Single title for the entire building, this is one thing I'd like to resolve as part of the remortgage.

To the query on commercial mortgage, I've no real concerns, I'd just like to remortgage to "something"

[vinnie83]

pacoryan said:

As Sarnie says it can be done but the majority of lenders take a dim view of food outlets due to the smell/noise/fire risk that can have a negative impact on the value. Might be easier to be considered as a single Commercial project rather than multiple BTL's?

I would suggest looking at specialist commercial brokers as it seems beyond the average mortgage brokers remit (I'm a mortgage broker)...

Sounds far more like a commercial project IMO - certainly worth a call around, I can PM you some numbers if you would like.

[4lf4-155]

1 title, 1 commerical lease and separate btl's for the residential elements?

You won't need a broker - Any high street bank will do this through their business banking channel.

The amount you can borrow will max out at c.70% but more likely can be limited by rental income amounts.