Corporate Lets

Can a limited company apply for a corporate let mortgage?

You can apply for a corporate let in a personal name or a limited company. The choice depends on specific circumstances for the client, particularly whether they’re a higher rate taxpayer or not.

When discussing limited company or personal applications, we always advise clients to speak to their accountant. If you don’t have one, we can recommend firms that specialise in property accounting.

What is the typical Loan to Value for corporate let mortgages?

A 75% Loan to Value is pretty typical. You need to have 25% of the value of the property to put down as deposit.

Let’s say you’re buying a property worth £500,000, as an example. You would need savings of £125,000 to put towards that.

How does potential rental income impact the mortgage application process?

The amount an investor makes in rent each month on a property is used by the lender to assess that client’s ability to repay the mortgage. It’s not to do with the investor’s income so much as rental income.

With a standard residential mortgage, the borrower’s income is normally used to calculate whether the client could repay the mortgage, but here that’s not the case. With residential mortgages, usually lenders will offer a mortgage of between 4.5 to 5.5 times the borrower’s income, but with corporate let or Buy to Let mortgages, it’s all about the rental income.

Are there specific industries or businesses that lenders prefer as corporate tenants?

It does depend on the lender. Some lenders prefer to offer corporate let mortgages where the client’s renting their property to a blue chip company. The fact that those companies are reliable and global makes them more likely to make their rental payments when they’re due.

We’re also seeing a big trend for corporate lets with social housing providers. Those can come with additional criteria that the investor will need to meet – such as whether the lender allows vulnerable tenants to live in the property, for example.

Matching a specific corporate let mortgage requirement to a lender can be a complex process. It’s definitely worth talking to a broker in these situations. We’re doing a lot of these – almost daily. We’ve got good knowledge on this.

Can I switch from a standard Buy to Let mortgage to a corporate let mortgage?

Yes, it’s possible, but you need to change the tenancy agreement and probably the tenant to do so.

You’d also need a specific agreement which covers letting to a business, organisation or corporate entity rather than a person or people. You’ll need help from a solicitor to make changes, and you need to be flexible around the time period of the existing tenancy agreement.

We do have connections with some law firms that handle this type of work for our clients, so we can recommend some if needed.

What fees are typically involved in setting up a corporate let mortgage?

It’s difficult to say categorically. You pay the normal lender administration fees to set up the mortgage. Typically you can add those to the loan within certain loan to value thresholds.

If your corporate let is to a social housing provider, sometimes lenders charge a higher admin fee for the additional work involved – like checking the provider’s history and credit worthiness. You could say that’s how they justify it.

You might also face higher solicitor fees for a corporate let mortgage, as the agreements involved are more complex than if you’re renting to private individuals. Actually, some lenders look at those agreements in some detail. If they are too onerous on the landlord, they may not like them.

Speak to us about which social housing company you’re thinking of using. Some lenders don’t like certain social housing providers’ tenancy agreements.

We also charge a fee for our service, but you only pay once we’ve actually sourced a mortgage for you. Once you’ve got the mortgage offer, that’s when you pay our fee.

We have an initial phone call to talk about your plans, give you an idea of what you can borrow and tell you what’s involved in the process. All that is completely free. We don’t charge just to have a chat. If you want to bounce any ideas off us, that’s also totally free and you’re not obliged to carry on with your corporate let mortgage application through us.

What else do we need to know about corporate let mortgages?

We’ve pretty much covered it. Social housing is definitely in vogue at the moment. We can help on the mortgage side, but we can also help with more creative property finance.

Perhaps there’s a property you think would work really well as a corporate let, but it’s not set up like that. You might need bridging finance to make the required changes – and we can help with that as well.

You might be a portfolio landlord being challenged by lower rents, so you’re wanting to change over to corporate tenancies. Come and speak to us and we can discuss the opportunities for you.

There may be a fee for mortgage advice. The precise amount of the fee will depend on your circumstances and will be discussed and agreed with you at the earliest opportunity. Typically, in most cases, our fee will be £495. We charge £595 for bridging and adverse credit cases; and £995 for Later Life Lending.

Mortgage Style Ltd is registered in England and Wales. Registered Number 5743648.
Registered Office: Elm Tree Farm Estate, The Sheepway, Portbury, Bristol, BS20 7TF.

Mortgage Style Ltd, trading as Mortgage Style, is an appointed representative of the H L Partnership Limited, which is authorised and regulated by the Financial Conduct Authority.

YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE REPAYMENTS.
Bridging loans arranged via referral to our sister firm, Brunel Bridging
The Financial Conduct Authority (FCA) does not regulate some forms of Buy to Lets.