• Skip to main content
  • Skip to site footer
Holiday Let Mortgages

Holiday Let Mortgages

  • Home
  • MORTGAGES
        • Holiday Let Mortgage Broker

          We have been specialising in holiday let mortgages since 2006 and have accumulated a deep understanding of all types of holiday let finance.

        • Holiday Let Mortgages
        • Holiday let remortgages
        • Buying a holiday home
        • Expat Holiday Let Mortgages
        • Mixed & Multi-Unit Holiday Lets
        • Guest House Mortgages
        • Deposits
        • Holiday Park Mortgages
        • Development Finance
        • Review Service
        • Mortgage Guide
        • Mortgage Criteria
        • Holiday Let Tax Rules
  • INSURANCE
  • ABOUT US
        • Holiday Let Mortgages is an Independent Mortgage Broker specialising since 2006 in mortgages for holiday let properties.

          This means that we are free from any outside influences in terms of where we can go to get you the best mortgage rates and deals available.

        • About Us
        • What We Do
        • Review Service
  • CONTACT US

Specialist INDEPENDENT mortgage brokers – ☎ 020 8301 7931

  • Guides
        • HOLIDAY LET GUIDES

          We have a lot of resources to help you with your holiday let. There are quite a few guides plus many articles on how we can help people successfully invest in a holiday let property.

        • Holiday Let Mortgage Guide
        • Holiday Let Mortgage Criteria
        • Buying a holiday home for investment
        • Holiday let property guide
        • Guide to UK Holiday Lets
        • Buying a holiday home in the UK
        • Jargon Buster
  • Calculators
  • Articles
        • HOLIDAY LET ARTICLES & CASE STUDIES

          There is lots of useful information in our article and case study sections. Built up over many years we share new developments in lending attitude and also client case studies for the more difficult holiday lets!

        • Articles
        • Case Studies
        • Q&A

Complex holiday let purchase via limited company

You are here: Home / Case Studies / Complex holiday let purchase via limited company
At Holiday Let Mortgages, we receive enquiries relating to mortgages for both simple and professional holiday let, in equal measure. Usually these arise from internet searches based on very specific phrases.
Simple holiday let property would be a single unit (house or flat), purchased as a private individual or held in a limited company and generally is intended to provide a secondary income with the applicants retaining their main sources of income.
Professional Holiday Letting has many nuances and facets. Mortgage solutions for complex, multi-unit, mixed use type of lending, which involves an element of, or is wholly for holiday let, invariably requires a bespoke lending approach. Inflexible, pre-set lending criteria would be a barrier to lending in complex cases, because they tend to involve unique variations in security, people and purpose.
At Holiday Let Mortgages we do our best to tell you how we work, by using our large back catalogue of case studies. This is our most recent multi-unit, mixed use holiday let purchase case, where the applicant decided to hold the property in a limited company.

Mr RP’s case:

As we are very active on the internet, we always ask our customers what they as searched for and in this case it was, “multi-unit limited company holiday let mortgage”.

Right from the start, we knew that the customer was looking at something quite complex; being classed as professional or a trading business holiday let.

The customer told us that he had found a small trading holiday let business in Cornwall, which consisted of a main house and 4 outbuildings, which were restricted to holiday let use only. The vendor was a limited company and all of the buildings were seasonally let; income producing, with professionally produced accounts available.

RP told us that he intended to use the property in a different way, which he believed would increase the potential income, so was concerned that the accounts would not fully reflect his idea for the property. His plan was to sell his existing property, which would raise 40% deposit on a purchase price of £1.9M, then relocate to the target property.

RP and his wife were to live in the main house and his wife was going to run the holiday let business. As the couple were to occupy less than 40% of the property we told him that the case would be classed as non-regulated under FCA rules, therefore more reliance would be placed on the commerciality of the business and less on personal income.

The couple ran a successful fire protection company, which had been trading for 10 years, and were drawing £200K in PAYE and Dividends from their company, leaving a reasonable retained profit- which over the years had built up enough to provide the deposit for the purchase. RP and his wife had taken advice from their accountant on the best way to fund and hold the business. The accountant had suggested that there were two ways to purchase the business: an asset purchase or a share purchase.

In the case of the share purchase, RP could either use an SPV (Special Purpose Vehicle) or his trading company to purchase the shares in the company that owned the holiday let business. Using this method, there would be a charge of 0.5% stamp duty on the company share purchase. Overall, the saving for RP would be around £135,300.

The accountant had warned, however, that the legal due diligence required to ensure that no undisclosed legal or financial liabilities of the vendor company existed, could amount to £15K or more. The lender advised that they would insist on separate legal representation for themselves, given the complexity and due diligence involved, and that RP would be responsible for paying both sets of legal costs.

In the case of the asset purchase, either an SPV or the trading company, would purchase the asset itself, with SDLT payable at a higher rate. RP decided, on the advice of his accountant, that the share purchase was the route to be taken.

In order to progress the case further, in addition to the usual application requirements the underwriters requested:

  • 3 years’ accounts for the Fire protection business
  • 3 years’ full accounts for the trading holiday let business.
  • Detailed business plan to include projections and cashflows forecasts based on their new plans.
  • Copy of site licence

 

Category: Case StudiesTag: complex holiday let, limited company, multi use holiday let

Let’s work together

Get in touch with us and send some basic info about your project.

Get in touch!

CONTACT US

Holiday Let Mortgages

1st Floor, 140 Long Lane
BEXLEYHEATH
DA7 5AH

T 020 8301 7931
E mortgages@holidayletmortgages.co.uk

QUICK LINKS

Holiday let mortgage guide

Guide to UK holiday lets

Holiday let mortgage criteria

Holiday let articles

Holiday let tax

WE LIKE TO TALK

Please contact us whether you have found a property or project that needs financing or you are just in the early stages of forming a plan.

It’s often an advantage to discuss the financial side of a deal before everything has been agreed. So please call us on 020 8301 7931 and tell us your holiday let ideas.

Copyright © 2020 · Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Broker fees may apply. Written details on request. All loans subject to status. Think carefully before securing other debts against your home. The Financial Conduct Authority does not regulate holiday let mortgages. Holiday Let Mortgages is a trading style of Drake Mortgages Limited and this website is owned and operated by Drake Mortgages Limited who are authorised and regulated by the Financial Conduct Authority FCA Register No 207532 | Privacy | Terms