Assignable contract buy to let for non dom investors with an SPV

CONTACT STEVE

THE SCENARIO

I recently assisted a group of Italian non dom clients with the purchase of an off plan assignable contract buy to let property, within a Special Purpose Vehicle (SPV).

My clients wished to invest in the London property market, capitalising on Apple’s UK headquarters relocating to Battersea, and the redevelopment of the iconic Battersea Power Station, approaching Enness thanks to our reputation for having strong relationships with a large network of lenders. They also wanted to work with a broker with whom they could have a personal relationship.

The clients were directors of the SPV company, and wished to purchase a new build buy to let property in Embassy Gardens, part of the Nine Elms regeneration scheme in South West London. The property was valued at £982,000 and they required 50% loan to value (LTV).

There are a number of challenges which arise when helping clients with a non dom buy to let; particularly when the clients in question had no UK footprint. Furthermore, purchasing a property with an assignable contract can also be an obstacle, as they tend to be purchased at a premium to the original purchase price. This is particularly challenging in Nine Elms where supply is considered to be outstripping demand and many lenders feel overexposed due to the high volume of properties set to complete at the same time.

They were in a position to purchase the property with cash but wanted to make the most of the current low interest rates in the UK mortgage market. They also wanted low penalties, should they wish to sell the property in the near future.

OUR SOLUTION

I approached an international lender who I had worked closely with on a number of recent cases and I knew would take a bespoke approach to my clients’ circumstances. They were a private bank who I was sure would be comfortable with their non UK taxable income, and foreign source of wealth. Lending to SPVs by underwriting the directors of the company is becoming more common, but it’s rare to find a lender who will do so for a company with more than two directors, which was my clients’ ownership preference.

Despite many lenders being over exposed in Nine Elms, this particular lender was happy to offer them the loan as they deemed the loan size relative to the original purchase price acceptable, and completed an independent secondhand valuation to be sure.

The result was a 5-year, interest only facility, at a rate of 2.75%+3 months LIBOR, with early repayment charges of 1% for 2 years.