Helping a Landlord with Tenants in Situ Cover an Existing Charge

Loan Amount:
£150,000

Property Value:
£200,000

LTV:
75%

We supported a landlord who required funding to repay a separate facility that was coming to an end. As the capital wasn’t going to be used for a property purchase, we had to explore the client’s existing assets and resources to support the loan.

We also had to place additional emphasis on the potential exit strategies available to make sure the loan would be covered effectively.

Our underwriter got to work. From the outset, they reached out to the borrower’s accountant to make sure the deal sat on solid financial plans.

Taking precautions even with a solid deal

We saw the borrower had built up their wealth from several sources. What’s more, they had stable sources of income. They also had a clear credit record, showing there shouldn’t have been issues with the repayments.

The property being used for security was also in good condition, following a recent refurbishment. There were also sitting tenants, bringing in monthly income for the owner. The client was also very experienced in the property world, which gave us even more confidence.

While there were many positives to this deal, we still took a cautious approach to ensure the deal would work. We worked closely with the valuer involved, while also requesting relevant documentation covering how our funds would be used.

Given the borrower’s strong credentials, along with having multiple exit strategies available, we issued the loan.

Sitting tenants can present pros and cons

Progressing with a property investment plan can be tricky with sitting tenants involved. Also known as having tenants in situ, they can potentially devalue a property by as much as 30-40%.

What’s more, people can often find themselves becoming accidental landlords who may struggle with their new responsibilities and obligations.

But, with over longstanding years of specialist lending experience behind us, we’ve built up vast swathes of knowledge on the buy-to-let market. We understand the ins-and-outs of the landlord scene, and all the challenges that can present themselves.

We’ll know how to adapt to your situation, and take into account all the complications. If you want to expand your buy-to-let portfolio, with or without sitting tenants, we’re here for you.

FAQs

Why can buying a property with tenants in situ be challenging for many investors?

Purchasing a property that already has tenants can be a smart move for investors wanting instant rental income. However, many high street lenders see tenants in situ as a hurdle due to complications with existing agreements, potential rental voids, or difficulties with vacant possession if needed later. At Market Financial Solutions, we understand how to structure funding that works around existing tenancies, so investors don’t lose valuable opportunities in a competitive rental market.

How did you act quickly to secure this deal?

Speed was crucial because the borrower needed to complete before the property went back on the open market. We began underwriting on day one to assess the tenancy agreements, rental income, and security position. Our dedicated underwriter made sure every detail was checked promptly, allowing us to issue terms within 4 hours without unnecessary hold-ups. By moving quickly, we gave the borrower confidence they wouldn’t lose the property.

How does flexibility help when tenants are involved?

Every tenancy situation is different – some investors want to keep tenants long term, while others may plan to refurbish or sell the property down the line. We don’t take a rigid approach. Instead, we look at each borrower’s exit plan and tailor the bridging loan to fit into their circumstances. This adaptable way of working means we can help clients unlock funding to seize an opportunity.

How do you maintain transparency?

When tenants are part of the equation, clear communication is essential. We keep the borrower and their broker updated at every stage, outline what we need – such as tenancy agreements, rental statements, and property condition reports. This open approach means there are no surprises at completion. It’s all part of our commitment to being transparent and reliable, so clients can focus on their investment plans without any last-minute uncertainty.