In the recent past property prices were booming and flats were in huge demand. If they happened to be above a retail outlet this was of no significant concern as they would often be a thriving small business. Then disaster struck and prices started falling, many flats and apartments were suddenly worth a fraction of their purchase price and lenders were once bitten and twice shy when assessing these properties. Values were further hit as businesses boarded up or were replaced by ‘lower standard’ businesses such as fast food outlets.
Buy to Let above a Shop
What Type of Lender Should I Approach
The problem you will have when looking for a mortgage on these properties is that the majority of buy to let lenders now will only consider flats above ‘premium’ types of retail or commercial outlet. Think a book shop rather than a kebab shop!. This poses a problem if you have a profitable unit let to good tenants that you don’t wish to dispose of and for whatever reason require to refinance (either to raise money or secure a better deal).
If you have a flat above a premium outlet then you will have some success with most lenders that still offer Buy to Let mortgages. I would still discuss this with one of our expert brokers to ensure you get the best deal but it is likely to be straightforward for you. However if you own a flat over a less desirable unit (food outlets and other late opening shops or places where paint or other flammable materials are used or stored) you will need to approach a lender who can consider these kinds of property. Your business bank manager will no doubt be able to quote but on terms considerably worse than typical buy to let rates which is where the panel of specialist lenders available to our brokers can help. Be sure to compare the offers available to make sure you get the best deal.
What If I want a Semi-Commercial Mortgage on the Flat and Shop?
A few years ago most of the high street was willing to consider semi-commercial loans. For example Leeds Building Society used to have an active Commercial Mortgage desk as did the Skipton. Much of the lending from these sources has dried up and borrowers have been forced to turn to a typical commercial mortgage or business loan to fund these kind of properties after the banks ran their buy to let calculations. Alternatively one could look to splitting the title between the flat and the shop and arranging separate mortgages on each.
If you have a good relationship with your business bank manager you have no doubt already obtained a quote from him or her on a business loan for the flat and shop which you have let out. Perhaps you operate the shop yourself and let the flat – on this basis a typical business loan is perfect as they will assess your requirements and income accurately based on you account with them and your accountants figures.
Many times in the current market, however the best rates on business mortgages are available through specialist brokers who have access to some more focussed lenders – ones that specifically lend on the type of property you are working with. Being able to arrange flexible terms on cheaper rates than your business bank as well as raise a higher LTV – sometimes up to 75% LTV on semi commercial mortgages is a big win for you. In cases like this it is definitely comparing your high street offerings to those from a specialist broker.