About a year ago I helped this particular landlord to refinance his property portfolio and offered him some buy to let advice. The portfolio differed from many in that my client had originally bought the property as an old nursing home before converting it into eight flats, choosing to sell only one, live in the penthouse and rent out the remaining seven for the last year. However, he had recently decided that he wanted to buy a family home in the same area, valued at £1.3 million, part-selling some of his portfolio in order to raise the finance. He was seeking buy to let advice and determining the best way in which to go about doing this.
The problem was that his usual income (circa £35,000) as a self-employed solicitor was not able to support this level of borrowing – according the usual income calculation he would only have been able to raise £160,000 at this level. The ancillary income that he generated from his buy to let properties did not have a sufficient income history for most lenders to consider it as “income” for further borrowing.
This meant that he came to me seeking buy to let advice – namely a solution that would enable him to raise money against the cumulative buy to lets and purchase the new property outright. The main problem with this situation was that usually a buy to let landlord has multiple proper ties spread over different areas and buildings. However, my client owned the freehold of the building and he also owned all of the leases on the flats. When a landlord owns multiple properties in the same building lenders consider them to be overexposed – seven properties in the same building certainly falls into that category!