Whether you’re a corporate entity or an individual looking for funding to:
- acquire property
- invest in your business
- refinance your existing borrowings; or
- develop property
Or you’re a lender/investor providing funds to a borrower to assist in achieving its objectives, there are factors to take into account when engaging in property transactions.
As a borrower, you need to make your property assets as attractive to a lender as possible, how you do this will depend upon the nature of the property interest you hold and the reason why you require the funds.
It is not unusual that whilst you consider that your proposition is one worthy of funding, a lender may think differently. Primarily, this is down to internal policy decisions. For example, a Bank having a policy not to lend on a residential development project, or a decision not to lend against a portfolio refinance because the quality of the tenants in the portfolio are not sufficiently strong enough in the lender’s opinion to support the level of loan to value which you wish to borrow.
You have to bear in mind that a lender is always going to want to be satisfied as to debt service – i.e., your ability to repay the loan. On a property portfolio transaction, a couple of major points for the lender to be satisfied with is that the valuation of the property stacks up and the rental income generated from the properties is sufficient. It may seem simple, but getting the best tenants and rents you possibly can is not to be underestimated and you should always consider using a proactive and respected agent. At Square One Law, we understand how to package a deal for a lender and borrower alike. In acting for high profile clients in funding transactions, our proactive approach achieves excellent and timely results for our clients.
While the nature of the transaction can vary, the options for securing finance can at times be found beyond the high street bank, for examples:
- State Aid
- Government schemes
- Private equity investment
If the finance you require is for investment into plant and machinery or to fund a business acquisition or share buy-back, it is quite often a requirement for the lender to bring the businesses property into the frame, taking security over it to support the loan provided to you by the lender for your other business purposes.
Reviewing and reporting on the title to the property against which the lender’s security is to be secured is critical to the perfection of the security for the lender. Equally, in acting for the borrower, advising on the terms of facility letters and the security package is crucial as you don’t want to be signing up to something you might regret. In addition, if you were to embark on a property development project, the lender is also likely to want to see construction documentation in place, and in particular ensuring that the building contract and collateral warranties are suitable. All of these services are provided by Square One Law. Your lawyers should work directly alongside your other professionals, such as your agents and your accountants to ensure that all angles are covered, therefore ensuring that you receive the best protection at all times.