Short-term loan for sale of flats with no rental income

THE SCENARIO

A client of mine had recently developed an old country house and converted it into seven flats, with a view of selling them on. I had previously secured a bridging loan on these flats for my client during the earlier stages of the sale process, however he then returned to me as he was struggling to sell the remaining three.

Essentially the market had become saturated with oversupply in this area, which had caused my client to hit a wall. One of the main contributing factors to this was a very large-scale development company had built another complex of flats just across the road, which reduced the value of my client’s properties as a result.

Despite my client’s overall wealth, one key challenge was my client had a series of previous difficulties with lenders in the past so many were unwilling to accept his application, especially on a short-term contract, which is generally more difficult to secure anyway.

Additionally, these properties were not currently tenanted, so the product would have to be based on my client’s personal income alone, rather than rental income; something the majority of lenders will avoid as it is harder to make a case for affordability.

Overall, the challenge with this case was getting lenders to see past my client’s personal profile, his ‘colourful’ past with lending, and getting them to focus solely on his current financial situation. Thankfully, I have a wealth of experience with more complex and off-piste issues and was sure with perseverance I would be able to find the right solution for my client.

By drawing on an excellent long-standing relationship, I was able to convince a more specialist lender to take a view of my client’s case, which they were happy to do, and secure the necessary loan.

OUR SOLUTION

I acquired a 3 year product at a very reasonable rate on the non-occupied flats, despite the lack of rental income, and despite the client’s historical difficulties.