Smallholding purchase - 'knot' what it first seemed!

Angela Scott and her husband Will Riggs lived in Spalding, Lincolnshire. Angela works as a project executive for the Environment Agency and already had a vested interest in 5 acres of land with stables and buildings near Wisbech, Cambridgeshire previously owned by Angela’s ex-partner.

When her ex-partner died, Angela had the opportunity to buy the full share of the land from his estate. Angela and Will’s plan was to renovate a building to live in and bring her two horses, currently at livery, to the farm. Will, who was retired, would set up the farm business with livery, egg and pig production, haylage sales and dog day care enterprises. 

R&BS created an attractive lending proposition for banks

Angela and Will needed to buy the land, a mobile home, livestock and fencing to allow the farm business to be established. They looked for finance themselves, and after several banks saying they couldn’t lend for rural properties of that nature, they did find an offer but at a 9% interest rate. Angela approached R&BS to see if they could find a better alternative. Graham Sanders took on the case. 

Graham pulled together employment and pension incomes, projections for costs and income on the new property into a lending proposal. He requested a 15 to 20-year loan, with the first two years on interest-only. This was to allow Angela and Will time to sell their house in Spalding and to establish the farm enterprises. On the sale of their Spalding home, the loan could then be switched to a capital and repayment basis. 

Of the three lenders which Graham submitted the proposal to, a high street bank came back within the timescales requested with a 4% above base rate offer – which was later negotiated to 3.5% - on a variable rate loan. The valuation was completed, a relationship manager quickly approved the loan over the telephone and Angela and Will instructed their solicitor. They were delighted the purchase was going ahead.

Angela said, “After hitting a brick wall with some lenders and then getting an expensive offer from another, Graham was invaluable in helping us find a sensible and affordable offer. He knew the market and the banks to go to, and how to package our proposal to get a positive outcome.

He was even able to negotiate a 0.5% reduction in the interest rate, which was a great bonus!”

An oversight by the bank threatened the deal

The mortgage process looked to be running smoothly. But just days before drawdown, a new member of bank staff noticed the valuation had highlighted a small amount of Japanese Knotweed on the property which wasn’t picked up in the first bank check.

Angela and Will quickly moved from delight to despair. Having invested money in the property and the process, and moved their horses to the site already, the purchase might not go through, as the presence of Japanese Knotweed can considerably reduce the value of any property and prevent the bank from accepting it as security. They were disappointed the bank hadn’t noticed this sooner.

Graham spoke to the senior lending manager in the bank to express our dissatisfaction with their oversight and to discuss a positive way forward. With Angela’s contacts at the Environment Agency, it was possible to rapidly complete an environmental report and an action plan for removal of the weed.

Graham maintained dialogue with the bank and when the environmental report and eradication plan was complete, he submitted it to his contacts. The plans were pushed up to the regional director for the bank along with the R&BS lending proposal. Within 24 hours the bank decided to proceed, and the funds were drawn down 48 hours later. Angela and Will felt massive relief and are now excited to be in their new property.