Limited number of lenders offering corporate-let mortgages

by Aaron Strutt

Oct 01 2018

If you are purchasing an investment property with the intention of letting it to a company via a corporate let, it may not be an easy process to find a standard buy-to-let mortgage. 

Trinity Financial regularly receives enquiries from clients struggling to find a lender to provide them with a corporate let mortgage. In many cases, they would be letting the property to a management company who sublet rooms individually to maximise the rental returns. 

Even though many of the banks and building societies insist properties must have standard assured shorthold tenancy agreements (AST's) there are potentially some lenders providing finance options. 

State Bank of India allows company let mortgages providing there is one rental agreement but not on a room to room basis.

Another large lender is happy to provide mortgages via corporate lets, and it can be let for a maximum of 12 months. Consent is not required to renew the tenancy, but the occupiers need to be named on the agreement.

Aaron Strutt, product director at Trinity Financial, says: "An increasing number of clients are looking at corporate lets and many of them are surprised how many of the lenders are not happy to provide them with a mortgage. One of the banks we work with is considering improving its criteria to make these mortgages more viable as it is getting more enquires."

Lender offering corporate let mortgages with best buy rates

One large building society is happy with corporate lets where the property is or will be let to a corporate body. This typically includes local authorities, housing associations, educational establishments and large multi-national corporations letting properties to their staff.

If the property is let to a corporate body in England or Wales, the lender's maximum tenancy term between the corporate body and the actual tenants cannot exceed 36 months. If it is greater than 12 months, it should comply with DCLG standards and the property cannot be occupied by more than four individuals. 

As there is no standard type of letting agreement between the borrower and the corporate body, the lenders acting solicitor will need to assess the agreement and ensure that it does not contain any clauses that would seriously affect its security. It must have a covenant requiring the corporate body to maintain the property.

Call Trinity Financial on 020 7016 0790 for a corporate let mortgage