Q

My wife and I are considering a lifestyle change, moving away from our corporate city life and into the country. I am in Business Banking and my wife works for a company that advises on corporate takeovers. We are nowhere near retirement age, so will need a gainful occupation. In our minds there is no point moving to the country and commuting back into to the city, re-joining corporate life. If we sold our house, the net proceeds would be circa £1M.

We are thinking of buying an existing business, but most of those that we have seen don’t fit our “skill set”; however, we have seen what is described as a “holiday let complex” with a large main house for owners’ accommodation being sold through a specialist Estate Agent.

The holiday let side of the complex consists of 6 beautifully converted stone barns, with planning permission to convert the last remaining barn, into holiday accommodation. The vendor lives at the holiday let business and is using it in the same way as we intend to use it, so it has a trading history and accounts. We would be looking at converting the final barn at some point.

The price is £1.7 M and it is located in Devon

Our question is:
Can we get a mortgage to purchase this holiday let complex when we will have no other form of income and have no previous experience in the hospitality and tourism industry? Jon

A

Yes, you should be able to get a mortgage to purchase this holiday complex without direct experience in this industry.

You are quite right in what you say, some businesses require particular skills that one either has or has not and the success of these businesses is wholly dependent on the former. This is an area that some people make a serious error in and things go bad quickly. In the case of a ‘lifestyle change’ from the corporate world to running a holiday let business, holiday let complex or self- catering business as they are sometimes known, our lenders are more concerned with transferable business skills.

Because the income from holiday let business operation will be the only income available for servicing the loan, the lender is going to firstly want to see a set of full accounts for the business. If the lender believes that the accounts show income that is good enough to service their debt and the lifestyle of the applicants, they will then consider the applicants’ business plan and whether they are in a position to maintain or increase the profit from the business.

This is where transferable business skills come to the fore.

In your case, having demonstrable skills in banking, finance and business generally, a lender would be more than satisfied that you could be classed as a “reasonably efficient operator” and should be able to at least maintain business income at the current level.

You mentioned the unconverted barn with planning permission, giving site licence of 7. This should be mentioned in your business plan, because it is a potential source of additional income, which could well give a lender a degree of additional comfort.

If you would like to know more about the process, please call the office and speak to Mark, he will talk you through the next steps.