Mortgage on a house divided into bedsits

onthestreet

Hi There, I would like to get a residential mortgage on a house that has been divided into 7 bedsits. Has anyone experience of banks that are willing to provide a mortgage if I have the funds to convert it back?

onthestreet

... and there are tenants in situ, personally I'm relaxed about when they move out as I am renting myself and my contract has a some time to run. But, what way does the vacant possession process work, does the bank come and check?

MarkAnthony

onthestreet wrote: »

... and there are tenants in situ, personally I'm relaxed about when they move out as I am renting myself and my contract has a some time to run. But, what way does the vacant possession process work, does the bank come and check?

No but your solicitor would need to make undertakings, and they won't unless there is actual vacant possession. Have you thought about a BTL mortgage?

Cuddlesworth

Mu understanding is they don't like issuing mortgages without vacant possession.

Two questions, is it legal accommodation even as a bedsit? Have you actually got the money to convert it back? I think the bank would expect proof of that.

Supercell

A family member of mine bought a place like this. They did approve his mortgage but on the proviso that the tenants were moved out before drawdown. Luckily it all went fine and he is in it now.

onthestreet

Yes, it is legal and I have the money to convert it back. How does the vacant possession concept work? I assume that no one actually arrives at the property to check its empty, so does the vendor just agree to provide it on pain of being sued?

L1011

onthestreet wrote: »

Yes, it is legal and I have the money to convert it back. How does the vacant possession concept work? I assume that no one actually arrives at the property to check its empty, so does the vendor just agree to provide it on pain of being sued?

Your solicitor would have to lie to the bank. Somewhat more of an issue there, what with the potential loss of career...

onthestreet

I am trying to work out. 1 Who is responsible for providing vacant possession. 2. The logistical - who checks for vacant possession. No suggesting I get solicitors to lie for me etc etc please

onthestreet

onthestreet wrote: »

I am trying to work out. 1 Who is responsible for providing vacant possession. 2. The logistical - who checks for vacant possession. No suggesting I get solicitors to lie for me etc etc please

I looked at buying a pre63 property, about 100 years old,subdivided into flats, and was approved for a mortgage.
I had the cash to buy the property, but the bank wanted to see an architect's cert at various stages to draw down on the mortgage for the refurb.
Just be careful to see if the property is on the list of protected structures, which makes matters more complicated.
I didn't go ahead with the purchase in the end, as the refurbishment costs were too high, I would also recommend you ask a builder or 2 for a quote, get a good survey done, and get advice from an architect.

L1011

onthestreet wrote: »

I am trying to work out. 1 Who is responsible for providing vacant possession. 2. The logistical - who checks for vacant possession. No suggesting I get solicitors to lie for me etc etc please

Asking how to circumvent the requirements is asking your solicitor to lie for you

Victor

At a minimum, expect to have to completely re-wire and re-plumb the building.

Note that the bank may expect you to spend all your part of the money before you draw down the mortgage.

onthestreet wrote: »

Yes, it is legal

Note that bedsits have been illegal for about 7 years. If they are rented out, the landlord is committing an offence. If they are currently being let out, one has to ask is there are other issues with the property. Other things aside, studios are legal.

onthestreet wrote: »

But, what way does the vacant possession process work, does the bank come and check?

onthestreet wrote: »

I am trying to work out. 1 Who is responsible for providing vacant possession.

The existing owner is expected to provide vacant possession at handover.

2. The logistical - who checks for vacant possession. No suggesting I get solicitors to lie for me etc etc please

I imagine it is up to the purchaser to check. While their solicitor or the bank might not check, they can. Having sitting tenants means those tenants have rights.

Deleted User wrote: »

I would also recommend you ask a builder or 2 for a quote

Not worth the paper it's (not) written on. You are asking them how long is a piece of string.

kilclon

If your intention is to convert to single family home, you would be mad to purchase without vacant possession. May be very difficult to remove tenants after purchase.

Supercell

OP, once the tenants are out it's obvious. You visit the place and agree with the seller that they are out.
You then instruct your solicitor to proceed. Thats how it worked for my family member. The bank was happy enough with that. Dont make this more complicated than it needs to be.
If the seller wants you to proceed without checking that they are gone, or is wink wink, walk away.

onthestreet

The bank now says that I will need to provide the cash for refurbishment, but the house is habitable and the valuation anyway reflects the condition of the property. Surely, this is double counting by the bank?

The_Conductor

onthestreet wrote: »

The bank now says that I will need to provide the cash for refurbishment, but the house is habitable and the valuation anyway reflects the condition of the property. Surely, this is double counting by the bank?

Its not double counting by the bank.
The bank are providing a mortgage for the property 'as-is'.
They are stating up front- that they are not going to provide funds for renovating the property.
If it is, as you have said, currently habitable- what people normally do- is move in immediately and renovate on an ongoing basis (as they have the time and the funds to do so). Sometimes- this can literally take years. Alternatively- get an alternate source of funding and do the renovation at the outset.

If the renovation adds to the value of the house (which it may not!!!) then the mortgage with the bank is associated with a lower LTV ratio- and you could ask pretty please for better terms from the bank- but that really is as good as it gets.........

onthestreet

Well say for example, the property is for sale for 100K EUR "as is", and the valuer says its worth 100K. LTV is 80%. The property is habitable, but recommended renovations after moving in could total 20K EUR. In this case, instead of lending 80K, the bank will only lend 64K.

Surely that’s double counting, since the LTV is now only 64%

The_Conductor

onthestreet wrote: »

Well say for example, the property is for sale for 100K EUR "as is", and the valuer says its worth 100K. LTV is 80%. The property is habitable, but recommended renovations after moving in could total 20K EUR. In this case, instead of lending 80K, the bank will only lend 64K.

Surely that’s double counting, since the LTV is now only 64%

How do you reckon that the bank will only lend you 64k?
If the property *is* habitable- and you meet the rules for an 80% mortgage of 80k on a 100k worth property- the bank have lent you 80k.

What you plan on doing after this fact- renovate it- or move straight in- is your business, and not the concern of the bank. If you are spending additional money on it- you have to get this elsewhere.

'Recommended renovations'- covers a multitude of sins- and in the context you're using it- suggests that property is not in actual fact habitable- and needs considerable work to be made habitable?

20k worth of renovations- for a property split into bedsits- seems improbably low (so too does the 100k purchase price- though, as its currently non-compliant, as its bedsits- its probable that there could very possibly be a compliance order issued to the current owner- which he/she is unable or unwilling to comply with (probably on cost grounds) and they are instead, divesting of the property (which is what most sane people would do).

The bank are being upfront here- you are trying to twist your interpretation of what they will offer you- and in what format- to suit your needs. Unfortunately- you are not singing off the same hymn sheet.

At this stage- I would sit down with a mortgage advisor- and bounce ideas off them- I genuinely don't think what you're suggesting is plausible, or a runner- it just sounds like the current owner is trying to get shot of the property to be honest.

We're getting half the story here- along with a diatribe from you on how unfair the bank are being- when in actual fact they are just offering you a prudent loan- based on the situation you have presented to them.

onthestreet

Thanks for comments "The Conductor"No, 100K/20K is not the real amount, sorry, was just 1. to make the maths easier. 2. to keep the actual (higher) amount confidential since this is a public forum. But, noted, Im waiting a fuller response from the bank to understand their reasons, e.g. if they think that I need to spend money to make the place habitable. Will post back.