Remortgage expertise helps lights to shine on rural business

Emma Tarr had a residential interest-only mortgage from a high-street bank for 18 years. When the bank’s mortgage term was nearing its end, the same lender could not offer an alternative mortgage because, by this stage, Emma had mixed uses on her smallholding – both residential and commercial.  So she needed to find a specialist lender who would support her.

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Where R&BS made the difference...

• Emma gave herself plenty of time, involving R&BS over 12 months before her interest-only facility expired.

• Rob presented the various securities, incomes and serviceability to lenders in an easy to understand and detailed lending proposal.

• Rob delivered a choice of mortgage offers from high street and private banks which allowed Emma to choose the best deal, terms and lender to suit her and her family’s long-term requirements.

• We introduced a very knowledgeable and effective solicitor whom Emma, the bank and R&BS could work with.

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Emma's story

Emma and her husband David had lived in Horns Oak Farm, Meopham, Kent for eighteen years. The property comprises 18 acres with a farmhouse and three apartments. It also has an 8,000 square foot barn which contains a stable block as well as office facilities, work-shops and storage used by Emma’s successful business, Absolute Action. The company designs, manufactures and installs fibre optic lighting systems, picture lights and bespoke LED lighting for an impressive client list of museums, galleries, palaces, restaurants and hotels in the UK and abroad.  

The three apartments are let on Assured Shorthold Tenancies and the stables and six of the acres are let on a DIY livery basis. Emma uses the remaining acres for a small herd of red deer and some soay sheep. She also owns a buy-to-let property in a neighbouring town. 

The remortgage challenge

When they were originally purchased, the land and buildings at Horns Oak Farm were secured on a residential mortgage with an interest-only facility from a high street bank, with which Emma and David had a good banking relationship. However, due to changes in bank policy, the bank advised that they would be unable to extend the mortgage because they were no longer able to support properties with farming acres and a mix of commercial and residential uses.

Emma says:

“A remortgage was essential for the continuity of our living arrangements as well as our business, but we never thought it would be so difficult. We took our own route initially with the Company’s bank, only for their lending criteria to change mid-stream, meaning they had to pull out more than halfway through the process – leaving us, at that stage, facing something of a deadline. We needed someone who understood us, our business, our holding and the issues that would arise throughout the process.  Through our membership of the Country Landowners Association (CLA), we found R&BS.”

Rob Lister, Director of R&BS says:

“There are lots of interest-only mortgages out there where the relationship runs smoothly until the bank announces they must switch to a repayment mortgage due to changing bank criteria and policy, or can no longer support their clients for other reasons.  Emma had approached other lenders and while initially positive, they too also had difficulties in considering the income streams and security combined with the clients’ age criteria.”

R&BS presenting choices

Emma and David’s circumstances had to be presented in the right way to find a specialist lender who would understand them and their business, and then support them. Rob says:

“We took into account the income from Absolute Action and combined this with Emma and David’s personal income streams, savings and pensions. We focused on the land and properties as security and presented a proposal to lenders in a way which they could understand, which met their appetites as well as their criteria, and proved serviceability and security wasn’t an issue. With one son joining the business as Director and two others driving their own careers but potentially joining the business in the future, succession planning and a long-term banking relationship was of paramount importance to Emma.” 

Rob succeeded in getting two types of agreements for them to consider – one from a high street bank and another with a private bank. Both offered good solutions, and gave them a choice between length of commitment, competitiveness, future flexibility and the type of personal service that would be best for their needs.  Rob explained the pros and cons of each to Emma.  In the end, she chose the option which suited both their personal and business circumstances and also gave long-term security meaning, she wouldn’t be placed in a re-mortgage position again. Emma can now focus on continuing to develop Absolute Action.

Sadly, having been in failing health for some time, David (aged 79) passed away in February 2019, right in the middle of the process. But with the support of an excellent solicitor, who dealt with the legal and tax issues quickly, and a valuer who R&BS knew well, the finance plans continued to proceed smoothly. The solicitor, who had been recommended to Emma by R&BS, also advised on suitable business structures and were effective in removing a number of bank-standard covenants, conditions and guarantees from the loan agreement.

Emma says, “Rob’s support and tenacity throughout the process of getting Horns Oak Farm securely re-financed were little short of heroic. His fine grasp of detail, and the work and time he put in to sort out a difficult scenario is hugely appreciated. Not just that, but the professional people he recommended to assist in their specialist services along the way were also spot on, delightful to do business with and worked strongly together to get my deal over the line.”  

Indeed, her family’s relationship with some of these specialist service providers, as well as with Rob himself, continues to this day.