Our client is aged 72 and wanted to raise capital against buy to let properties in his business’ portfolio. More specifically, he needed to raise £2million against two buy to let properties.
He runs a property management business which owns 3 properties in Mayfair & Belgravia. The business runs at a loss with income coming mainly from property divestments. There are, however, significant cash reserves in the business and its net asset position is strong at circa £4 million. His 5 year plan is essentially to ‘sell up’ and take out his assets in a tax efficient way.
He came to us as he wanted to buy a residential apartment mortgage free without needing to first sell his existing residential home. In this instance my client’s desire to raise capital against buy to let properties can be considered as a form of commercial bridging finance really.
To raise capital against the buy to let properties we offered the client a solution with one of the Private Banks we use. They agreed to a loan of £2 million, which replaced any existing finance and gave the client the extra borrowing requirement he needed.
A term of 5 years was set, interest only with a bespoke LIBOR tracker rate. No assets under management were required but the client will, in fact, deposit funds with the bank.
His main aims were to:
1: Raise capital against buy to let properties to give him leverage
2: Raise capital against buy to let properties in the most economical way
3: Establish an ongoing, working relationship with a bank
We achieved these 3 aims and the client is very happy with our solution to raise capital against buy to let properties.