.... then the following three scenarios one of my clients put forward will be of interest. (She kindly agreed for me to share it.)
She is a successful interior designer who opened her own business just over a year ago.
Moving forward she would like to buy a semi-commercial property: housing her own office or show room, probably with another flat on top to rent out, and maybe another flat for her to use as her residential home.
Based on the three scenarios I shared the following insight into lenders’ assessments and things to consider.
"1. Using part of the space as your residential home
Firstly, so long as your residential space comprises less than 40% of the overall space of the freehold of the semi-commercial unit it is viewed as non-regulated. However, the majority of lenders will view any part of the property where the client is living as making the whole a 'live-work unit' and thereby regulated. Regulated lending is restricted to the high street and therefore only a few lenders will be willing to support.
Even if the residential elements are separated with long-leases and the lend is just against the commercial element a lot of the banks will want a comfort charge on the leasehold, for repossession purposes. Again, this will make the whole lend regulated. So, as and when you have identified a property we'll need to know the property's ownership and title structure in order to assess further.
2. Moving your own business to the premises
If you move your own business in then this becomes an OpCo PropCo (‘operating company/property company’). Lenders will vet the performance of your business rather than just the passing rental of the property (although that will be considered as well). Having said that, a years’ worth of good accounts and decent Management Information should be ok for you.
3. Buying the whole property as an investment
If you decide to acquire a property as an investment then the residential element will help. Most lenders are looking for at least 1 years’ worth of landlord experience to manage this type of property. To use the commercial rental to partially cover the affordability you will need a tenant in-situ day one, generally on a reasonable length commercial lease."
Do contact me to discuss further if any of these scenarios sound like your current plans:
bcacao@cc-finance.co.uk;
