Mortgage for a former pub premises

dreadhabib

Hi all,

Looking at a former pub premises - which consists of pub and two apartments; one at basement level, the other at first floor level.

The pub has been closed for circa 2 years and pub/commercial use has been assumed to be exhausted - the property is being sold with potential for full residential conversion, subject to consents.

With regards to a potential mortgage on a property such as this - mortgage for reference would be approximately £60,000 - I assume that although the property is no longer a functioning commercial concern, a residential mortgage would not be feasible?

Would I need to look into a commercial mortgage?

Fire_Fox

This has come up before, worth running a search. Can you even get change of use from the council's planning department? Are the apartments classed as habitable? You may find you won't get a commercial mortgage without a viable business plan, speak to an independent mortgage broker.

dreadhabib

Hi, many thanks for the response.

I've also contacted a mortgage broker too - but was also interested to get the viewpoints and guidance fomr people on here as well...

The existing flats are indeed habitable - one is a 3 bedroom; consisting of kitchen, living room, bathroom, office and 3 bedrooms - and the other is a one bedroom, consisting of living, kitchen, bedroom and shower-room.

Pub itself as a property is a repossession. With the current flat on the first floor and other on lower ground; the proposal, would be conversion of the ground floor (current pub) to a further apartment...

The alternative, is conversion of entire property to a single dwelling, which is what it would have originally been.

Fire_Fox

Is there more of a market for a house or flats locally? Is there a garden? Flats would be mortgageable as residential if they were classed as habitable and were leasehold. The remaining unit could possibly hold the freehold title, that would have to be on a bridging loan/ different mortgage. This could be done within the conveyancing, IF the lender agreed. I might be making it more complicated than it needs to be tho!

CKhalvashi

Fire_Fox wrote: »

Is there more of a market for a house or flats locally? Is there a garden? Flats would be mortgageable as residential if they were classed as habitable and were leasehold. The remaining unit could possibly hold the freehold title, that would have to be on a bridging loan/ different mortgage. This could be done within the conveyancing, IF the lender agreed. I might be making it more complicated than it needs to be tho!

This was what I was thinking.

As an investment, you may be looking at 2x BTL mortgages and a Residential, however the pub premises we bought (which was no longer a commercial concern) is now leased to a local brewery for the next 15 years, meaning I don't need to worry about it.

CK

MobileSaver

dreadhabib wrote: »

The pub has been closed for circa 2 years and pub/commercial use has been assumed to be exhausted - the property is being sold with potential for full residential conversion, subject to consents.

"Assumed to be exhausted" by whom?

As Fire Fox said, the big issue here is the "subject to consents" - getting change of use permission of a pub to residential is far from trivial.

CKhalvashi

MobileSaver wrote: »

"Assumed to be exhausted" by whom?

As Fire Fox said, the big issue here is the "subject to consents" - getting change of use permission of a pub to residential is far from trivial.

Which ended up costing another £300k for a full refurb when we bought the building we did.

We were in the lucky position of being able to lease the property out for the next 15 years, however on a variable mortgage after 2 years and no increases for 5 (with less than a year on the fixed rate, 2 years ago), if rents go up, you'll need to budget significantly for.

We're in the lucky position of having money aside, you may not be so lucky.

CK