Case study: When you need 75% on a tricky semi-commercial property

It’s Friday again everyone.  I hope all of our working home schoolers are asking for as much help from relatives/friends as you can.  I decided to take on Ellie’s daughter’s schooling for RE…  With no children at home, I really didn’t understand just how time-consuming home schooling was.  I’m only doing 2 hours a week, but if a few people can do zoom lessons, it really does help in more ways that you can imagine.  Employer empathy and support is key to keeping good staff in a healthy mental state at the end of this tough time.  We all need to dig deep.  I took my actions from watching the Ernest Shackleton Antarctic trip in 1915…. Absolute team work is key to long term survival.  It’s worth a watch for some inspiration.

So to the weekly blog.

As it is the last of the January case studies, this week it is on a refinance of a semi commercial property.

The property is in London, has been extensively refurbished over the last few months, extended and fully tenanted out.  As you are aware, using commercial rent can be difficult during this time, particularly if you need 75% loan to value!

If you want the maximum LTV, then comprehensive knowledge of the property and client is key.  Most commercial rent cannot be used if the tenant has not been trading in lockdown – which for some industries was sadly not an option.  The tenant also needs to have been trading for more than 12 months and have a minimum of another 12 months left on the lease.  This particular commercial tenant had another food shop, so able to trade.  They were expanding and had just signed a new contract at our property, which was a problem for this lender.  In anticipation of the lender’s questions, I extensively researched the viability and quality of the incoming tenant so I could satisfy myself it was worth a ‘fight’ with underwriting.  That included websites, social media, reviews – all angles covered.

This all started before Christmas when, as you are probably aware, lenders were super busy.  The underwriter was honestly one of the best (Greg Barnard of Hampshire Trust Bank) and happily called me to discuss the detail; which can resolve things so much more quickly and easily than a long string of emails.  With some fine tuning of information, we had our offer at 75% LTV.  This gave us a super happy client and completion should be today.

I know we keep bleating on about this, but knowing your lender’s true appetite it is so important to the outcome of the case. 

The other important part is having a really good team at the solicitors (Nicola Watson, Naomi Williams and Eva Ciunkaite at Paris Smith). They can make or break transactions – opt for a ‘cheap’ option and you can really end up paying more.  They have worked tirelessly, 6 days a week and their communication is top drawer as well. Thank you, ladies.

Baya are still able to complete refinance cases in a reasonable time – lender dependent still before end of March.