Mortgage for part commercial part residential

holly_hobby

Ok, well you already know its tricky as:-

• you want to keep it as commercial premisis (i.e not convert the whole unit back to residential),
• you don't want to live on the property yourself,
• you want to rent flats that apparently don't have planning permission (so presume don't meet building regs) or seperate access (which will be an issue not only for deed splitting, but to any tenants of the flat for security reasons - as I probably don't believe due to access they have ever probably been occupied/let by anyone other than the Vendor )
• your broker has advised its going to be difficult to place

How long has your broker being trying to place this ?
Who have they approached ?

You have stated that HSBC have rejected the proposal solely because you won't be an owner occupier ..... and that the "flats" were not really the issue with them.

But you did start the thread by saying that you are looking at the unit becuase the purchase of a flat for you and your partner had fallen through ...

So you apparrently need somewhere to live - why not just move into one of the flats to secure your HSBC mge (if as you indicate, that's all it will take for them to accept your application ?).

Of course any application will be subect to survey (the conversions I feel will cause an issue), suitable status & affordability enqs being conduced and satisfied.

Other than this, I am unable to give you a name of a lender whom I think will accept, so I would leave this with your broker to source via lender contacts and support you through the application process (which is painful on a commerical mge !).

Holly

deshg

holly_hobby wrote: »

Ok, well you already know its tricky as:-

• you want to keep it as commercial premisis (i.e not convert the whole unit back to residential),
• you don't want to live on the property yourself,
• you want to rent flats that apparently don't have planning permission (so presume don't meet building regs) or seperate access (which will be an issue not only for deed splitting, but to any tenants of the flat for security reasons - as I probably don't believe due to access they have ever probably been occupied/let by anyone other than the Vendor )
• your broker has advised its going to be difficult to place

How long has your broker being trying to place this ?
Who have they approached ?

You have stated that HSBC have rejected the proposal solely because you won't be an owner occupier ..... and that the "flats" were not really the issue with them.

But you did start the thread by saying that you are looking at the unit becuase the purchase of a flat for you and your partner had fallen through ...

So you apparrently need somewhere to live - why not just move into one of the flats to secure your HSBC mge (if as you indicate, that's all it will take for them to accept your application ?).

Of course any application will be subect to survey (the conversions I feel will cause an issue), suitable status & affordability enqs being conduced and satisfied.

Other than this, I am unable to give you a name of a lender whom I think will accept, so I would leave this with your broker to source via lender contacts and support you through the application process (which is painful on a commerical mge !).

Holly

Hi Holly,

She claims the flats were let out on ASTs, i get the impression these were to people she knew so the normal issues weren't quite so much of a problem. I ony first spoke to my broker yesterday so she's only been trying for a day and i haven't heard back yet so don't know who she's approached. With regard to HSBC is the commercial section that has to be owner occupier so i'd either have to run a beauty salon or start using it as my offices, which i would rather not do if it can be avoided at all.

As you say there may be an issue with the survey (and conversions). Do you know what the usual situation would be in this case (if it was being bought on a commercial mortgage as an investment), if there were some (relatively minor) building/fire regs upgrades that would be required presumably (if they weren't too major) they may lend the money on the condition this work was done immediately to make it legal?

Thanks so much for your help, it really is greatly appreciated.

Dave

holly_hobby

As I thought with the flats & the access issues.

In my opinion if you wanted to have the flats as a going concern and part of the business - the access may well be an issue, in addition to any flouting of building/safey regs that were made when the "conversions" took place without planning permission.

You need before you go any further to find out if there is planning permission for the conversion of the flats/change of useage - if there isn't I wouldn't go any further myself - until the vendor has applied for and SECURED retrospective planning permssion and sign off, from the local council.

I would also say that it seems an awfully big leap from just buying a residential flat that fell through, to buying and effectively seeking to becoming a commerical landlord in the blink of an eye. Think about it with your head and not your heart ...

I would also suggest, assuming planning permission proven/obtained and mge secured on your status & figs - that you are looking at circa 35% deposit as you don't appear to have any other security.

Let us know how it all pans out ...

Holly

deshg

holly_hobby wrote: »

As I thought with the flats & the access issues.

In my opinion if you wanted to have the flats as a going concern and part of the business - the access may well be an issue, in addition to any flouting of building/safey regs that were made when the "conversions" took place without planning permission.

You need before you go any further to find out if there is planning permission for the conversion of the flats/change of useage - if there isn't I wouldn't go any further myself - until the vendor has applied for and SECURED retrospective planning permssion and sign off, from the local council.

I would also say that it seems an awfully big leap from just buying a residential flat that fell through, to buying and effectively seeking to becoming a commerical landlord in the blink of an eye. Think about it with your head and not your heart ...

I would also suggest, assuming planning permission proven/obtained and mge secured on your status & figs - that you are looking at circa 35% deposit as you don't appear to have any other security.

Let us know how it all pans out ...

Holly

Hi Holly,

Thanks so much for your extensive reply! There is no planning permission for the flats upstairs, i know this for certain (as far as the planning office are concerned it's one residential unit). I appreciate it may seem like a big leap but i've been looking for an investment property for a while and the flat we found before (it was a big flat!) needed huge amounts of work. This is obviously a much bigger project but allows for a much higher return if it works out which is why i'm interested (and would result in a nice flat we could probably live in in a few years). I have done a few property renovations myself in the past including one similar one with a shop and a flat above, but this was years ago when lending was much much easier and i got a commercial loan and had a huge deposit (i didn't even have a full time job or 3 years worth of accounts for that one!)

From our perspective i'm not so worried about the 2 flats and the planning permission, it works for us whether it's two 1 bed flats or (as it is legally at the moment) one 2/3 bed flat. We would also get the vendor to take out indemnity insurance against the unofficial works. The conversion was also done nearly 4 years ago so my intention was to wait for the 4 years to be up then apply for a certificate of lawfulness for the flats and try and legalise them (alongside doing any required work). If this was refused and we couldn't get retrospective planning then we'd just return it to one single unit upstairs (as it legally is now). What we are really interested in doing is converting the commercial space to a residential flat (hence why i'm not so bothered whether upstairs is one flat or 2), i've spoken to the planners about converting the shop at length and it sounds very likely this would be approved.

So you can see that it's all a bit of a nightmare as from our perspective whilst the possibilities are not certain we are happy with a number of possible outcomes, however i understand the bank is most likely to want a guaranteed/safe route to revenue without all these uncertainties. This is part of the reason i'm on the forum as i'm interested in peoples views as to the best way to achieve this. I also appreciate the likely need for a 35% deposit or so, which while not ideal is workable.

Thanks so, so much for your help, if you have any other comments/ideas then i'd love to hear them!

Dave