A client called in initially looking for some advice as she was looking to purchase what she had been advised by the Sellers as a multi-unit block of 5 flats on one Freehold title. This was a Limited company purchase with an element of the deposit coming from a gift by a family member.
We sourced and submitted the application with the best deal over the initial 5-year fixed period.
However, following receipt of the application, the Lender then checked with the Land Registry and notified us that the flats were not in fact all one title, but instead as 5 flats with separate leases. The client was informed of this and she decided she was still wanting to proceed with the purchase the flats, but this would now have to be done with 5 separate mortgage applications.
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Following this, there was then an issue of the freehold, which also was intended to be purchased. This exposure can be a problem for lenders in situations like this, so we had to source the deals, and confirm certain lenders would take however many in the block, without breaking their exposure limits.
We ended up with a solution which encompassed 3 different lenders and advised the client she would have to place the freehold in her own name, whilst the purchases of the leaseholds would go into her company name, as lenders usually want to see the freehold owned in a separate legal entity to the leaseholds.
This was all worked fine, and we managed to submit and complete all 5 property purchases successfully.
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Things to consider:
- When purchasing a block, it’s important to know how the property is set up. One multi-unit on a freehold title will be one application, whilst if there are separate leases in place, it will be multiple.
- If owning both a freehold as well as also leaseholds in a building, the freehold would be advantageous to hold in a separate legal entity.
- Lenders have exposure limits to buildings and also streets and areas, and generally will not lend over a certain percentage of a building.
To know more and speak to one of our Buy to Let Mortgage Experts, call us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Buy to Let Mortgage Experts will get back to you straight away.