Councils using ‘Intelligence’ to track down low EPC properties and fine £5,00015:08 PM, 29th March 2021
About 3 weeks ago 39
I have a pressing problem with the planned purchase of a BTL. I wonder if you could help?
In summary, I’m looking to buy a house through my BTL Ltd Company (set up following section 24.). The house is a good investment as it is split into 5 self-contained flats and in a row of other terraces mostly subdivided in the same way. The combined rent covers the mortgage 4 times over. The units are in reasonable condition albeit they are not luxury apartments. The vendor has 2 others on the same street and says they all rent well but he wants to sell 1 to pay off the mortgages on the other 2 and spend his retirement with 2 of these units mortgage free. I’ve spoken directly to him a number of times. He seems like a very reasonable chap and all of us live very locally and so is the purchase property.
So on face value this all sounds great!
The problem is that when we have applied for funding, initially we were told that these 5 units meant that we should be considered as ‘portfolio landlords. This meant that we have been required to apply to specialist lenders.
So I invested a few hours in the required business plan and other associated paperwork and paid fee and submitted application. The valuation was arranged and the vendor spoke to the valuer on the day who said that it was ‘fine’ and much better than a lot of the dross he gets to value. Everything seemed to be ticking along nicely until we got a flat rejection from the bank. Their reason was that the surveyor had reported the property required a ‘multi-trade refurbishment’ and that as all the units were tenanted they thought this would not be possible with the tenancies in place. The property is therefore not considered suitable security for the lender.
Both the vendor and ourselves are gobsmacked. The property is very habitable and the building is sound. We’re buying for £280k and the agent reckons if converted back to a single house it’d go for £350k and sell well. It would be easy to do this conversion and the £70k would probably cover it. the rent easily covers the mortgage. It’s a good buy all round.
Nevertheless the vendor and ourselves are in problem solving mode and so we have asked to see the valuation report. The lender won’t release it. The broker won’t pursue them any further. I got fed up and have called them directly. They say in summary that it needs full refurb and so it’s a flat NO. It won’t be considered again without a full refurb but won’t define what that means other than to say they look for quality property that is in good lettable condition and meets their 3 tests of: sustainability, suitability, saleability.
We can’t buy it on bridging finance without certainty that we can then get a mortgage. Also this would affect what we could pay for it too.
I’m thinking of the following actions:
1. passing all this on to the broker and asking her to look for other lenders again – not sure if all lender will take the same view
2. speaking with the vendor to see what they say
3. go back and view it and draw up a schedule of works that we can agree with the vendor would comprise a full refurb
4. perhaps have a meeting with the vendor and agent? to see if we can put our heads together and find a solution?
Does anyone else have any ideas?
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