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  • Mortgages & Finance

    Flat mortgage

    Hi all

    We have a building which encompasses a ground floor shop and a self contained first floor flat.

    The shop is tenanted at £650 per month and we have previously let the flat at £400 per month but have been refurbishing with a view to letting out again.

    The property is unencumbered and we are thinking of refinancing in the new year to release funds to purchase similar properties as the yield is Good. We have been approached by a housing association to rent the flat at £380 per month on a twelve month lease. They provide temporary accommodation and reading the sample lease they are responsible for the rent, the upkeep of the property and any anti social behaviour. I have spoken with a couple of other landlords who already rent to them and they could not speak highly enough of their experiences.

    Does anybody have any experience of this type of let as this would our first time letting to a HA. The flat has been a bit of an issue on AST's previously due to tenants not respecting it and not paying rent. I also would be interested to hear if this type of tenancy would affect the raising of funds in the new year?

    Thanks

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    Hello Paul,

    I was talking to a lender last week about a similar rental set up and they didn't like it. They said they viewed it as subletting.

    That doesn't mean there isn't a lender out there for this scenario

    If you'd like to get in touch, I'd be happy to do some research

    Regards

    John

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    You can contact me via Direct Message, or 07788 219647 or call the team on 01206 654444 for personalised quote and advice


    Hi

    It is important that you understand the detail of the proposed lease. There is little doubt that this is subletting but there are ways round this if you are creative.

    Lenders do not like sub-tenancies because of the potential inability to effect vacant possession if they need it. That means there is a smaller pool of potential lenders. I suggest you use a broker who works with lenders on a bespoke basis rather than one who focuses on providing access to mainstream products. You have specialist needs and you need a specialist approach to raising funds. You will therefore need to consider fees carefully as the quantum of loan looks small for the complexity and that comes inevitably at a cost.

    I have no doubt there are lenders available for you.

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    Tax advisor and mortgage broker

    stuart@johnsonsca.com

    02039077022

    You may find that HA's idea of fair wear and tear differs from your own with social tenants - who are living in a place which is not theirs - and also where with free rent via LHA may be seen as having nil value.

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    I think you need to find a landlord who has been through the process of letting to a housing association including how they found the condition of the property when it was returned to them.

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