SDKA has increased its semi-commercial loan-to-value (LTV) to 75% to meet increasing demand from developers turning semi-commercial properties into residential residences to take advantage of the non-residential Stamp Duty Land Tax (SDLT) rates.
Under current SDLT thresholds a residential property purchased for £200,000 would incur an £11,500 payment, whereas a semi-commercial building would result in just a £1,000 fee.
The figures at £500,000 would be £40,000 and £14,500 respectively, a difference of £25,500.
Once acquired, developers are using permitted development rights to convert the commercial element to residential, which has the potential to increase income streams from the same asset.
Scot Tsang (pictured), head of operations and in-house legal at SDKA, said: “The numbers are compelling to developers as SDLT savings can go a long way to, if not cover all, the associated costs of converting a semi-commercial asset into a fully residential offering which can increase income streams and asset value.
“By enhancing our lending criteria for semi-commercial properties to 75% LTV, an increase of 5%, we are ultimately providing greater flexibility and higher lending potential for every property professional and making semi-commercial properties an even more attractive investment.”
