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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3655
Experience:  Solicitors 2 years plus PQE
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My partner and his brother own a property that they have been

Customer Question

My partner and his brother own a property that they have been using as part of their Plumbing Business. They purchased it 15 years ago at a cost of £65,000. This property is now being converted into 2 x 2 bedroom terraced houses and 1 x 1 bedroomed terraced house. The first property is just about finished with the cost of the renovation of the housed being paid for by the business.
In order to fund the renovation of the other 2 properties, my partner (who owns 50% of the whole property) and myself who have nothing to do with the business, would like to buy the newly renovated 2 bedroom house at a cost of £170.000. We have got a deposit of £45.000 to put down and hence would like a mortgage for the balance. We are constantly coming up again brick walls at the moment, due to the fact that they is now mortgage on the property as it is part of the business.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Alex J. :

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you.

Alex J. :

What is the mortgage on the property?

JACUSTOMER-onml4jbe- :

There is no mortgate

Alex J. :

Hi, Thank you. ***** understand it would want to buy the property from the Business - what exactly is the brick wall you face? Is that you cannot get a mortgage?

JACUSTOMER-onml4jbe- :

Hi Alex,

Alex J. :

Hi

JACUSTOMER-onml4jbe- :

The problem we have come across is that my partner who owns 50% of the property will be buying off the partnership and this is where we have the problem.

Alex J. :

Hi, Thank you. Are the bank refusing to lend because of this?

JACUSTOMER-onml4jbe- :

Yes in a word.

Alex J. :

Hi, Thank you. Why do you need a mortgage at all? Can the partnership not effectively lend you the money so you repay the partnership and effectively "deferring payment" of the purchase price.

Alex J. :

In return your husband could waive his share of the profit?

Alex J. :

This would effectively be a paper transaction, the partnership would have a charge over the property until you sell or repay the "loan" so to speak.

JACUSTOMER-onml4jbe- :

My partner and myself are wanting to purchase it as an investment and the business who is not always flush with money require the income from the purchase of the first property to finance the renovation of the other two properties.

Alex J. :

Hi, Thank you. Do they require the whole £170k immediately?

JACUSTOMER-onml4jbe- :

Yes they would.

Alex J. :

Ok thank you. What have the bank said is the problem - do they not like the fact that your husband is going to profit from the sale or do they have problem with the valuation?

JACUSTOMER-onml4jbe- :

The main problem is my partner buying it off the joint business.

JACUSTOMER-onml4jbe- :

Hi Alec,

JACUSTOMER-onml4jbe- :

Hi Alec, I hope you able to reply back to me when you get a moment. My partner and I are just hitting our heads against a brick wall as mortgage lenders are not prepared to loan us money. Obviously I am aware there will be capital gains tax involved with the profit from the sale. Please help. Thanks,