Complex buy to let finance – the “ins and outs”

What is “complex buy to let”?

Most people think of buy to let finance as a straightforward & routine way to raise money to buy a single house to let out to a single tenant. However, there are many manifestations of buy to let property that cannot be funded with these mortgages. For example, whole (freehold) blocks of flats, Houses of multiple occupancy (“HMOs”), medium to large portfolios of property, limited company owners and professional investors.  These circumstances are often labelled as “complex buy to let”, and with these come various types of specialised “complex buy to let” finance.

What finance is available for complex buy to let property?

There are many different options for complex buy to let loans, and there is considerable diversity in the types of funding, lenders appetite and criteria. The interest rates charged are often higher than the rates for “simple” buy to let finance, being in the region of 2.5% to 4.5% per annum which reflects the additional complexity involved with the property and often also the circumstances of the owners.   The higher rates are seen for the more difficult transactions – perhaps for bigger blocks of flats, or property that in some way doesn’t meet most lenders criteria. Set up fees are often in the range 1% to 2% although there are some offers without any set up fee (but you might pay a little more on the interest rate).

How much will lenders provide for complex buy to let property?

Most lenders will readily fund 75% of the property purchase price, or value if lower. Subject to a wider assessment of the property and the loan applicant(s).  Some lenders will extend this LTV to 80%. Lenders will allow a refinance of the property to raise additional funds for further property acquisitions or other uses.  The loans can be provided for a period of up to 30 years, either via an interest only or full repayment basis. There are a number of other criteria that they utilise to assess suitability of applicants for the loan.

Lender’s criteria for complex buy to let finance

  • Experience. If you are to purchase a complex buy to let property, a lender will generally expect you to have owned at least some simple/straightforward buy to let properties before this time – perhaps for a period of one or two years.
  • Rents receivable. Prospective rents will need to cover loan interest costs by a minimum of 125% – known as “rental cover” or “debt service cover”.  So, for monthly interest costs of £1000, you will need to show that the property can generate £1250 per month of rents. Sometimes this rent will be calculated on an “after costs” basis. So, if you letting costs are roughly 10% of the gross rental income, a lender will deduct 10% from your gross rents to arrive at a “net rents” figure. This “net rent” figure may be used as the basis for the “rental cover” calculation.
  • State of the property. The property must be ready to be inhabited so that it can generate rents immediately. Any property that requires refurbishment works to make it habitable can still be funded, but via a specialist short term “refurbishment loan” initially prior to obtaining a long-term complex buy to let mortgage.
  • Applicants credit history. Most lenders (with some exceptions) want the applicant (and their directors/shareholders if a limited company) to have a clear credit history.
  • Personal Income.  Lenders want to see sufficient personal income to cover personal needs. This can be salary, dividends from a business, or a surplus of rents over and above loan financing costs. Many of our clients are professional investors, and a copy of recent tax returns are often sufficient for this purpose.


Complex buy to let investment is often a logical progression for those investors who have already acquired several more straight forward houses. The advantages can be higher yields, and a number of properties in one location which makes management a more effective process for multiple tenants. We have lots of experience in funding this type of property and will be delighted to speak to any professional and semi-professional investors who have or are looking for this type of property investment. Don’t hesitate to get in touch.

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