The Client
The client called initially looking for advice, having been told by the sellers that she was purchasing a multi-unit block of five flats on a single freehold title. This was a limited company purchase, with part of the deposit coming as a gift from a family member.
The Scenario
We sourced and submitted the application at the best available rate on a five-year fixed deal. Following submission, the lender’s Land Registry check revealed the flats were not in fact one title – they were five separate flats, each with its own lease. The client still wanted to proceed with the purchase, but this now meant restructuring into five separate mortgage applications rather than one.
A further complication followed. The freehold, also intended for purchase, raised lender exposure concerns – most lenders will only lend a certain percentage against any single building, and this exposure limit can become a real obstacle on larger blocks.
The Solution
We put together a solution across three different lenders, structured so that no single lender’s exposure limit on the block was breached. We also advised the client to hold the freehold in her own personal name, separate from the leasehold purchases, which went into her limited company – lenders generally prefer to see the freehold held in a different legal entity to the leaseholds it relates to.
The Outcome
All five property purchases completed successfully across the three lenders, with the freehold and leasehold ownership structured cleanly and in line with what the lenders needed to see.
Frequently Asked Questions
What is the difference between buying a multi-unit freehold block and separate leasehold flats?
A single freehold title covering multiple units is usually one mortgage application. Separate leasehold titles mean separate applications for each.
It is important to confirm the actual legal structure of a block before assuming it can be financed as a single purchase.
Why do lenders have exposure limits on a single building?
Lenders cap how much of any one building or development they are willing to lend against, to manage their own risk concentration.
This can mean spreading a purchase across multiple lenders where a large number of units in the same block are involved.
Should I hold a freehold in a different legal entity to the leaseholds?
Yes, this is generally what lenders prefer to see.
Holding the freehold separately from the leasehold interests it relates to is a standard structure lenders are more comfortable lending against.
Can a gifted deposit be used for a limited company property purchase?
Yes, though lenders will want clear evidence of the gift and its source.
A signed letter from the person gifting the funds, along with proof they had the money to give, is typically required regardless of whether the purchase is personal or through a company.
If you have any questions relating to a limited company buy-to-let purchase, contact us today to speak directly with one of our Mortgage Advisors.
UK Mortgage Broker is a whole-of-market broker directly authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it.
Call: +44 1628 969 500
Email: info@uk-mortgagebroker.co.uk
Related Pages
- Buy-to-Let Mortgages – whole-of-market advice for landlords across the UK
- How Much Can I Borrow on a UK Mortgage? – income multiples and affordability calculations explained
- Why Mortgages Get Declined UK – the most common reasons applications fail and how to avoid them