Commercial Mortgages and Remortgages

Commercial Mortgages and Remortgages

When considering mortgages or remortgages for commercial purposes the first distinction is whether the underlying property is residential or otherwise.

ONE: Residential

Where the property is residential the further distinction is whether the property is to be let or be developed either for onward letting or resale.

Purchase of residential property for letting

The "buy to let" market has already been established for some years and continues to play a major part in the residential property environment. Participants in this market will be very interested in the MMiToolkit for Property Investors which provides a detailed insight into the requirements of this market.

As regulation has mounted and this sector is seen as a "cash cow" by impoverished governments, so the legal aspects have become more and more specialised. McVey and Murricane have one of the largest "buy to let" practices in Scotland dealing with the whole range of potential purchasers; from the first flat for a new investor to the purchase of hundreds of units in the portfolio, knowledge of the market and its impact legally is vital.

Your client will have asked you to arrange finance to assist the acquisition of one or more properties and closely working with McVey and Murricane will greatly reduce the pressures upon you in advising your client of the potential pitfalls.

Homes for Multiple Occupation

Such properties can prove to be very fruitful investments for landlords but many lenders dislike them intensely. In addition, this is an area of letting which is subject to far more intrusive legislation and regulation than a standard "buy to let".

Dealing with these properties requires experience and knowledge. It is unusual for a purchase or remortgage of such a property not to encounter a problem with some aspect or another. Understanding issues that are "showstoppers" from matters that may be resolved is absolutely key to practice in this area. From both a lending and acquisition point of view, few practices have more knowledge in this tricky area than McVey and Murricane.

Understanding the regulation conundrum

Speak to many landlords and they will often remark that while there may be a great deal of regulation they do not see much evidence of it being enforced. There is good reason for this. Although the Scottish Government (and the UK Government) are keen on passing rules and regulations, they are not particularly keen in paying for the enforcement of those rules and regulations.

They are relying upon the fact that most landlords understand the obligations upon them and will comply with the regulations. They are also aware that the market is now effectively policing the regulations when the property is either sold or refinanced. With lawyers acting for lenders being ever more risk averse, these transactional events involving properties often become a test of the adherence of regulation by the existing owner.

McVey and Murricane recently spoke at a crowded investors meeting where this was one of the subjects of debate. You can see our presentation here.

TWO: Commercial Property

If your client is looking to purchase or refinance commercial property, then the relevant issues multiply.

Why is this? Firstly, since the financial crisis, commercial property has not been the "plat de jour” for most lenders and where lending is possible, costs and conditions have been considerable for anything other than the very best covenant.

While matters have loosened up meaningfully in the last couple of years, nevertheless, commercial property requires the highest level of scrutiny. Many clients will come to McVey and Murricane from introducers with the prospect of a commercial property proffering a highly attractive rate of return.

In more cases than one might expect, the underlying paperwork indicates that the apparently attractive return actually obscures a "pig in the poke". This is not an area for the fainthearted and where expertise and knowledge are at a premium.

McVey and Murricane are acquiring and refinancing commercial properties for clients every day throughout Scotland. Your client may have existing legal representation but this is a specialist area requiring specialist knowledge.


Given the complexity in this area, our specialists are always happy to discuss with you matters which may arise in respect of the transaction which your client hopes to complete. Time and time again, McVey and Murricane received thanks from brokers and clients for resolving issues and problems that have confounded other less experienced solicitors.