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  • Mortgages & Finance

    BTL flat with shop underneath.

    Hi, I'm interested in buying an occupied BTL Flat + vacant  shop underneath that I've seen for sale. The shop has approved planning permission to be converted to residential 2 bed flat.

    Its an Auction purchase, that didnt sell in the last auction, so there maybe scope to offer but with a longer timeframe to completion to allow time for the mortgage, but I dont know yet.

    I've phoned the council to find out the council tax costs of owning the empty shop...£3000pa, and it will remain at that until it is converted to a flat and signed off.

    I'm an existing LL with > 4 properties (still working also) I'd be ideally looking at interest only BTL of between 60%-75%. The current rent from the upstairs flat and my current portfolio passes the stress tests, but I believe 5year fixed rate morts are not subject to those tests which I would probably for for if available anyway.

    Has anyone experience in financing these type of deals? I'd like to avoid bridging if possible.

    Thanks,

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    Have you been in touch with your broker to secure the finance?

    If you would like to get in touch with the Property Tribes Financial Services, just tap on the mortgages tab at the top, or alternatively, my contact details are below. 

    Hope to hear from you soon!
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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    This is one of those deals you need to be careful how you buy. You are buying based on residential use/conversion. The top flat which provides the income stream is fine but as part of that same security package is a unit which will be a development site. You need to be careful that you structure the acquisition and mortgage properly to avoid paying developments finance rates on a straight forward BTL unit.

    You should also be aware that funding for flats above shops is not mainstream and attracts a premium. You need to factor this into your pricing,
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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Have you spoken to planning to enquire whether conversion needs full planning or can it be done under Permitted Dev rights and secondly would they have a parking and/or amenity space requirement (and can you satisfy that).

    Once your plans are finalised and submitted you can apply to valuation office to remove shop from rating register until completion of work, or alternatively from day 1 of purchase, can the shop be your property co's office and you claim small business rate relief (assuming you aren't using the relief elsewhere).

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    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.

    http://www.stewardson.co.uk

    Follow me on twitter - @philstewardson

    Yes, I've found the Valuations Office so easy to deal with whenever I've carved properties up and applied for new rating assessments.

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    Hi Phil, I spoke with the council on friday to find out how much the council tax is(on the shop), and when I could get it moved to residential. The answer was £3000pa for a tiny empty shop, and that it remains on that until the work has been completed and signed off as a residential. The planning permission has been approved already, so I was hoping it would revert to residential as soon as the work started, but that isnt the case according to the council.

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    Are you confusing Council Tax and Business Rates?

    You can input the address into the local authority website and the Valuation Office website to find out exactly how the shop and the flat are rated.

    Private message me with the address and I'll look it up if you want.

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    Hi, Thanks. I rang the normal council tax number, and they told me the flat was band A, and the cost (around £1050), they then transferred me to the department that handles the business rates. They had all the details for the shop underneath, so I think I was speaking to the right people.

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    Good stuff. 

    So, as Phil says, if you’re not claiming Small Business Rates Relief in any other premises and if this one’s below the threshold, put yourself in the shop and claim the relief and it will cost you nothing - only Council Tax on the flat.
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    Thanks, if the purchase is successful I would certainly do that.

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