Mortgage to buy an SPV Ltd Company and property it sits in?

by Readers Question

10:49 AM, 28th December 2016
About 2 years ago

Mortgage to buy an SPV Ltd Company and property it sits in?

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Mortgage to buy an SPV Ltd Company and property it sits in?

I want to buy an HMO which is already held in a SPV Ltd company.business

I want to retain the same structure going forward and therefore want to buy the limited company.

I’m looking for a lender who understands the transaction, where ultimately they would be valuing the asset held in the limited company and basing their lending on this (i.e. a mortgage). I appreciate as a director I will need to provide personal guarantees, which is fine.

I’ve already discussed this with a few lenders, who have said they aren’t geared up for it – i.e. Paragon, Vida, Shawbrook

In appreciation of ideas ….

Priti



Comments

Neil Patterson

10:52 AM, 28th December 2016
About 2 years ago

Dear Priti,

I have not heard of anyone buying the whole company to purchase a property before.

This will add a whole layer of complexity based on how the company was run before eg are there any directors loans etc.

At the moment most investors are setting up their own SPVs and purchasing within that, which a lot of BTL lenders are set up for.

Shaon Mukherjee

11:17 AM, 28th December 2016
About 2 years ago

I recently did this BUT i used my company to buy his company and on completion it was in my company's name. Wouldn't this be easier?

Neil Patterson

11:35 AM, 28th December 2016
About 2 years ago

Without any detail it does sound more complex hence why the lenders you have tried may be shying away.

You may need a commercial Finance broker to untangle this one.

Howard Reuben CeMap CeRER

12:06 PM, 28th December 2016
About 2 years ago

Hello Priti

You're not really buying the property, you're talking about buying a Company which includes it's assets (property, funds, fixtures and fittings etc) and of course it's liabilities as well.

This is more of a business finance transaction not a mortgage / property transaction.

Would it not be more simpler to set up an SPV and then your SPV can buy the HMO from the other SPV?

Or, become a shareholder (part or whole) of the vendor SPV and 'take over' the asset that way?

Whatever you choose, you first of all need specialist tax advice to determine the underlying obligations and costs of all permutations.

If you need HMO finance to simply buy the property, our Team of Advisers is available to assist.

Hope that helps.

Howard

Priti S

18:05 PM, 28th December 2016
About 2 years ago

Reply to the comment left by "Shaon Mukherjee" at "28/12/2016 - 11:17":

Hi Shaon

Thanks for your response.
Did you raise finance to enable your company to buy the company owning the property?

Priti

Priti S

18:16 PM, 28th December 2016
About 2 years ago

Reply to the comment left by "Howard Reuben" at "28/12/2016 - 12:06":

Thanks for your response Howard.

My SPV buying the the property from the Vendor's SPV would incur much higher stamp duty, and bearing my mind I wish to operate through a limited company, I would prefer, if possible, to buy the company, hence wanting to know if anyone had experience of lenders who I should speak with.

I've considered the route you outlined in your email of becoming a director and shareholder of the existing SPV, and then (re)mortgage the property to release funds, and am probably going down this route.

Howard Reuben CeMap CeRER

19:53 PM, 28th December 2016
About 2 years ago

Reply to the comment left by "Priti S" at "28/12/2016 - 18:16":

I'm glad my reply was considered useful. If we can assist with the remortgage, contact me anytime to see all the financing options available for you.

Shaon Mukherjee

23:56 PM, 28th December 2016
About 2 years ago

Yes i used a ltd co BTL mortgage

Priti S

23:22 PM, 29th December 2016
About 2 years ago

Reply to the comment left by "Shaon Mukherjee" at "28/12/2016 - 23:56":

Which lender did you use?

Shaon Mukherjee

0:02 AM, 30th December 2016
About 2 years ago

foundation

but many lenders will do this

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