Making An Owner-Occupied Commercial Purchase Simple

Project Background:

Our clients came to us because they wanted to buy a well-established hotel business that also included accommodation for them to live in. Their plan was simple: run the business themselves, live on-site, keep all the existing staff and build on what is already a successful operation. The hotel currently brings in around £400,000 to £500,000 a year, even though it has only been running part-time due to the current owner’s health. Because of this, there’s a clear opportunity to increase income once the business is open more consistently.

The property, which includes both the trading business and a private living area, is being bought through a new limited company. Although the estate is currently split over two legal titles, the intention is to merge it back into one commercial title, making everything simpler for the purchase and the lending.

Challenge:

There were a few hurdles to work through. First, the split titles could have made the lending process more complicated, especially because the clients will also be living on the property. Trying to separate part of it as residential finance and part as commercial would have created unnecessary delays and extra cost.

Another challenge was that the clients have never worked in hospitality before. Even though they are financially strong, lenders usually want reassurance when a buyer is taking over a trading business for the first time. On top of that, the business will be operating under a brand-new limited company, meaning there is no trading history for lenders to rely on. Instead, the deal needed to be assessed based on the previous owner’s accounts.

Finally, there was a tight timeline. The purchase needed to complete before the end of October so the existing owner could stay on for a proper handover period.

Solution:

To keep things straightforward, we recommended merging both titles into one single commercial title. This allowed the whole deal to stay as a commercial purchase, even though the clients will be living in part of the property. Because their living area makes up less than 40% of the building, this stayed within commercial lending rules.

We positioned the purchase through the new limited company and put together a clear and honest picture of the business for lenders, using the long trading history and healthy turnover to demonstrate affordability. The potential for greater income once the business returns to full opening hours was another strong positive.

To address the lack of hospitality experience, we highlighted the fact that the existing staff will all remain, and the outgoing owner will stay involved for twelve months to help the new owners settle into the role. This gives lenders confidence that the business will continue running smoothly during the transition.

Outcome:

With everything packaged clearly, we secured funding of £1,200,000, fixed at 8.99% for two years, against a property value of £1.9 million. This gave the clients a solid loan-to-value position and certainty over their repayments during the early stages of taking over the business.

The final structure keeps the purchase clean and simple: a single commercial title, one commercial loan, and an owner-occupied setup that fits comfortably within lender criteria. Most importantly, it gives the clients the breathing room they need to learn the business, work with the current owner, and start unlocking the full potential of the site.