Reply to: 'habitable' clause in BTL mortgage criteria

[ChimpMaster]

You're worried about trying to borrow £50k?

[chopper]

50% Shared Ownership so the actual price is £120,000...

Poor example then ;-)

But still, the Darwen sort of area you can pick up finished properties for under £60k. I just happened to pick the nicest example which turned out to be a tulippy one.

[eek]

Try places like Darwen
3 bedroom semi-detached house for sale in Brookway, Blackburn, BB2, BB2

which makes the place I'm interested in look positively expensive.

50% Shared Ownership so the actual price is £120,000...

[chopper]

WTF are you buying? Given that I live in one of the cheaper parts of the country I can't see anything selling at £75k finished that I would want to be near...

Try places like Darwen
3 bedroom semi-detached house for sale in Brookway, Blackburn, BB2, BB2

which makes the place I'm interested in look positively expensive.

[eek]

(My accepted offer is a lick over £50k, and worth £75k finished, rental at £450-£500 a month - I took the estate agent's estimate of £85k finished value with a pinch of salt)

WTF are you buying? Given that I live in one of the cheaper parts of the country I can't see anything selling at £75k finished that I would want to be near...

[Martin@AS Financial]

Fellows...

In the process of buying another property for investment purposes, it being 'in need of modernisation' with 'lots of potential'.

Of course, BTL mortgages tend to have a 'must be habitable' clause, with no real definition of 'habitable'. The house could be lived in: it has a fully working kitchen and bathroom, it has electrics (no gas though) - it is just really really old fashioned and does need a new everything - it even has original bakelite light switches in places.

Does anyone have any experience of whether mortgage companies would decide this isn't habitable (Natwest in particular) or whether I will be sent down the route of a bridging loan first and then get a proper BTL mortgage when it is actually ready to let out?

From a banks point of view, they are mainly concerned with the resale value in the event they ever need to repossess the property.

Essentially, a bank must deem the property habitable before they will release the funds. This will be down to the surveyors comments who will be looking for a functioning bathroom and a functioning kitchen. This generally means a sink and access to the mains water. A lender may also be concerned if there is problems with the roof and it is not uncommon for a lender to put a retention on the property ie the funds will not be released until the work is carried out. (taken from an old This is money article)

[chopper]

Recommend this
https://www.thebridgecrowd.com/borrow-money-uk

Fook me they know how to charge

Monthly interest rate: 1.3%
Arrangement fee £2000.00
Admin fee £350.00
Loan management fee £1000.00

Saffron have some interesting Buy To Let Light Refurbishment mortgages and they seem contractor friendly, but their minimum property valuation (according to the intermediaries site) is higher than the place I am looking at would be worth in pristine completed condition.

I am also still umming and arring over the 'doing it myself' vs 'through an SPV' route, and I do wonder whether for this particular venture, the additional cost of the SPV (higher mortgage rates, additional accountancy fees) would outweigh any tax savings and my own research points to mortgage companies providing loans to SPVs have high minimum valuation requirements which exceed what I am looking at.

(My accepted offer is a lick over £50k, and worth £75k finished, rental at £450-£500 a month - I took the estate agent's estimate of £85k finished value with a pinch of salt)

[northernladyuk]

Nasty looking piece of vinyl waste you have there. You want to consult Commission Regulation (EC) No. 10/2011 of 14 January 2011 (as amended by Commission Implementing Regulation(EU) No 321/2011 of 1 April 2011, Commission Regulation (EU) No 1282/2011 of 28 November 2011, Commission Regulation (EU) No 1183/2012 of 30 November 2012, Commission Regulation (EU) No 202/2014 of 3 March 2014, Commission Regulation (EU) No 865/2014 of 8 August 2014, Commission Regulation (EU) 2015/174 of 5 February 2015 and Commission Regulation (EU) 2016/1416 of 24 August 2016).

[Paddy]

Brexit Lemming

[DimPrawn]

Wait until Brexit and the definition of what is habitable will change in your favour.

[centurian]

Lots of houses which are "in need of modernisation" are perfectly habitable - just that prospective tenants would be expecting a lower level of rent.

However, it must meet certain minimum standards for letting purposes - and a few recently refurbished properties may still fall foul of a strict interpretation of those standards.

All this should come out as part of the valuation. What the mortgage company is interested in is - can it be rented out - and if so, for how much ?

[Paddy]

Buy on bridging.

Don't forget to take plenty of 'before' photos.

Get all your gear from LNPG to get better than trade prices.

Once fully refurbished, be present when the lender's valuer arrives so you can personally present him with a copy of the schedule of works undertaken to prove the uplift in value from your purchase price of only a couple of months previously.

Get remortgage based on uplifted value of the property. Get most of your upfront cash back out.

Rinse & repeat.

You do know about Section 24, and you are buying through a Ltd co. SPV, aren't you?

Recommend this
https://www.thebridgecrowd.com/borrow-money-uk

[RetSet]

Fellows...

In the process of buying another property for investment purposes, it being 'in need of modernisation' with 'lots of potential'.

Of course, BTL mortgages tend to have a 'must be habitable' clause, with no real definition of 'habitable'. The house could be lived in: it has a fully working kitchen and bathroom, it has electrics (no gas though) - it is just really really old fashioned and does need a new everything - it even has original bakelite light switches in places.

Does anyone have any experience of whether mortgage companies would decide this isn't habitable (Natwest in particular) or whether I will be sent down the route of a bridging loan first and then get a proper BTL mortgage when it is actually ready to let out?

Buy on bridging.

Don't forget to take plenty of 'before' photos.

Get all your gear from LNPG to get better than trade prices.

Once fully refurbished, be present when the lender's valuer arrives so you can personally present him with a copy of the schedule of works undertaken to prove the uplift in value from your purchase price of only a couple of months previously.

Get remortgage based on uplifted value of the property. Get most of your upfront cash back out.

Rinse & repeat.

You do know about Section 24, and you are buying through a Ltd co. SPV, aren't you?

[northernladyuk]

Wait until Brexit and the definition of what is habitable will change in your favour.

[chopper]

Interesting. I would go by whether council tax is payable or not. If it is uninhabitable then no council tax is payable. If the previous owner was paying council tax then it must have been deemed habitable.

I saw one definition of habitable as being:
"A habitable property is considered to be one that has a weatherproof roof and walls, plumbing, and other basic features that would allow a person to live in it at the time of purchase." (not from Natwest though).

Which it is. And indeed council tax would be payable (the owner has gone into care and needs to sell to pay for his care, so it is livable in - just not very nice right now).

The Natwest eligibility says "The property you wish to purchase, or remortgage to us, must be habitable" - other providers specifically say 'readily lettable'.