Nick Jones

The diversity of commercial securities



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As mainstream funding becomes harder to find, commercial brokers have a role to play in making potential clients aware of the kinds of properties lenders will consider as security.

They will often encounter instances of high street lenders refusing to offer funding in what they deem to be more unusual cases – such as on mixed-use properties, agricultural buildings or land for development – as they may only fit outside the lender’s pre-defined criteria.

However, specialist lenders such as Together can look beyond this kind of ‘tick-box’ approach to take a commonsense view on lending in more complex cases, and will consider lending in a surprising range of non-standard scenarios, including more unusual property types: anything from hotels and B&Bs to golf courses and amusement parks.

In the past few years, there has been an increased interest in commercial and semi-commercial property investments – in part because of changes to tax relief and regulation in the residential sector – and this changing landscape can offer opportunities for brokers looking for ways to diversify into new areas.

At Together, we’ll look at many more ‘non-standard’ securities on a case-by-case basis, as the following examples demonstrate.

Land

There are lenders who will not accept land as security because they do not have the experience of dealing with this type of commodity, or may simply prefer to lend against bricks and mortar. At Together, we will consider lending against land both with and without planning permission, if the transaction makes sense.

HMOs

Specialist lenders are also helping landlords to expand their buy-to-let portfolios by using the houses in multiple occupation (HMOs) they currently own as security, allowing them to borrow and fund their next purchase, when mainstream lenders may shy away from these often-complex cases. For example, we provided a £134,925, 12-month bridging loan to a pair of business partners – secured against a three-bedroom HMO in the Midlands – after a broker approached us with the complicated case. The property was worth £185,000 and the partners needed the finance quickly to enable them to buy another property at auction in Birmingham. We provided the funds needed at 62.7% LTV, allowing the investors to widen their buy-to-let portfolio.

Petrol stations

Mainstream lenders generally view petrol or service stations as specialised commercial property assets. There are only a select few lenders with an appetite for petrol station finance. Knowing who to approach and what they can offer can be critical when finding the right lender to deliver for customers. In one case, we lent £4.34m for a company to buy four petrol stations. The customer had been let down by their previous lender who – because of the complicated nature of the deal – could not release the funds in time. After carefully reviewing the case, we were able to complete the transaction in three days.

Given how many customers could fall outside the tighter mainstream criteria for a whole variety of reasons, it’s easy to see why alternative forms of finance are on the rise.

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