Featured, Mortgage Guide
Client details: The client, a professional property developer and non-UK national or resident, owns a semi-commercial property via a UK Limited Company that needs refinancing.
Property details: The client was interested in a detached semi-commercial three-storey building with genuine development potential. The property is currently a pub on the ground and first floors with a separate flat in the loft space. The current tenant was a local operator that had been on the site for many years and, as one of the few pubs left in the area, it is felt to be an important asset to the local community.
Reason for finance: Funding was required to enable the repayment of an existing term facility and to provide additional funds for other development projects.
Challenges: Whilst the tenant was a longstanding one, the current lease had expired and they were rolling the agreement on a short term basis to give the tenant time to vacate. This didn’t provide commercial lenders with the benefit of a longer term lease arrangement, upon which to approve finance. In addition to this many lenders have concerns about the hospitality sector in general, due to the current increases in utility and staffing costs putting significant financial pressure on commercial tenants.
Whilst planning permission was in place for the building to be demolished and replaced with a new, taller, semi-commercial building this permission did not have long until it expired.
During legal due diligence, points regarding the title were also noted by the lender’s solicitors, which required a pragmatic approach to be taken by both the lender and their legal advisors.
Solution: Working closely with the head of underwriting, a 12-month facility was agreed upon to enable the repayment of the existing lender. To allow for the expired lease, interest was retained for the term of the loan, providing the client with a period of time to review the most appropriate route forward for the building. All in all, it was a great outcome for the client.
Special thanks: We want to offer special thanks to our client’s solicitors, Louise Smith of Aquabridge Law and Alison Marsh of Genesis Legal, who worked on behalf of the lender. Both worked far outside of their regular office hours and maintained a positive problem solving attitude to ensure completion of the loan took place at the earliest opportunity. Without their help and excellent communication with all parties, this may not have been possible.
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