STUDENT HMO REFINANCE

LENDER – HTB

Loan Amount – £4,462,500

Interest Rate – 4.19% pcm

REFINANCE OF A STUDENT HMO PROPERTY PORTFOLIO INCLUDING MOVING BORROWING FROM A PARTNERSHIP TO A LIMITED COMPANY USING SECTION 162 INCORPORATION RELIEF

Clients are well established and very experienced Leeds based property investors in the student HMO market.

They had a portfolio of 10 student HMO properties currently valued at £5.950M, rental income £460,760, in their joint names of the borrowers against which there was a £4M loan outstanding with HTB.

The purpose of the loan was to refinance all of these properties into a newly formed SPV limited company to both repay the existing loan and raise equity for further property purchases. The loan raised, again with HTB, was £4,462,500 (75% LTV) on a 10 year interest only loan at an initial 5 year fixed rate interest rate of 4.19%.

We provided the lender with a “letter of reliance” from the accountant providing the appropriate tax advice.

The deal completed in February 2022 and was the first part of an ongoing programme of moving assets from personal names into a limited company SPV, thereby considerably reducing the borrowers’ tax liability.

As part of this exercise the borrowers raised £400K to put towards the deposit on further planned HMO acquisitions.