BTL - 4 flats

[Biggles111]

Evening All. I am looking at buying 4 flats occupying the first and second floors above a shop unit, which will remain with the vendor. All will come with new long leases, and can either be a single title or 4 separate titles.

What are thoughts on the most appropriate finance for this - I am considering BTL vs a commercial property loan. I am conscious that many BTL lenders don't like multiple units in the same building, plus upfront charges could be higher than the stamp duty saving if I go for 4 separate loans.

I already have a shop and 2 flats on a commercial property loan, but want to explore possible options on this new purchase before talking to lenders...

Grateful for ideas, thanks!

[Sarnie]

It won't be a commercial mortgage if the shop is staying with the vendor.

The bigger problem will be finding someone on a multiple unit basis over a shop.

[Biggles111]

Sarnie - my thoughts too. Gross rental yield is good, presently fully let on AST's. Ideally I want an LTV of 70%. Who might do it, and would the best approach be as a single title and mortgage, or 4 separate ones?

[Sarnie]

The bigger issue is the fact they are over a shop.

A multiple unit property is no problem as is 4 units on 4 titles in one building, it just will be back to being over the shop.

I've had a mortgage fall out of bed today because the surveyor returned a nil valuation, all due to the fact that it was over a commercial unit. The lender said their criteria stated that they will lend to properties over a commercial unit BUT they will always revert to the surveyors comments for a final decision. The surveyor said that due to being over a commercial unit, and surrounded by others, that the property could potentially be classed as undesireable and thus be difficult to sell in the event of a repossession......

What sort of a shop is it? What other units are there nearby? Lenders do not like any form of fast food establishments.....

[Biggles111]

Thanks Sarnie - useful feedback. The building is a converted bank (ironic!), with the ground floor presently used as a smart cafe - bar. The building is in good condition, but is grade 2 listed, which may restrict choice of lenders further...

[Sarnie]

Biggles111 said:

Thanks Sarnie - useful feedback. The building is a converted bank (ironic!), with the ground floor presently used as a smart cafe - bar. The building is in good condition, but is grade 2 listed, which may restrict choice of lenders further...

I think you'll find that most lenders will revert to "valuers comments" which basically puts the entire lending decision in the hands of the surveyor.....I would ask the vendor if the flats are currently mortgaged as that may give you an indication as to it's suitability for lending...