Unit Trust lending - Regional Resi multi lot site

Hello all

New here however was a user back at Somersoft days.

Question for the brokers experienced in:

1. Unit Trust lending
2. Development site lending
3. Regional properties / residential land

We (a unit trust) have bought up 6 houses next to each other on a main road in Ballarat Vic. 4 are settled, 2 are new purchases. All right next to each other and all tenanted resi houses. Currently looking at drawing down equity on original properties and refinancing all 6 into one loan.

There is no intention to develop anytime soon however because of the location of the houses next to each other plus positioning on the main rd, lenders are beginning to now see this as one mega dev site instead of series of houses. By classifying it as such and by having the titles in a UT name, available LVR is much lower than if individual houses and expensive risk fees are suddenly introduced. Not to mention higher interest rates.

Have also found many lenders want to limit their exposure to no more than a few properties in the same immediate area.

Anyone know of a lender that might see this for what it actually is? Or will they alway look at it as a dev site given the circumstances. Worth noting houses are zoned resi.

Happy to speak to brokers that have come across something similar. Many thanks

 

I think you mean borrowing rather than lending.

Most lenders will see this as a concentration risk - which is what it is!

Multiple entities owning would have been a better way to structure the ownership. It is only not recommended to buy more than 1 property per unit trust either.

If you find a lender you will also have to contend with the valuation which might be around 20% lower than the individual values.

 

If you're not looking to develop soon you'd be better off spreading the lending between banks, and not having one big loan. At least it looks more like resi lending then, and ther risk is spread between a few lenders.

That said, with unit trusts your lender options are already a bit limited.

 

I don't see this as concentration risk - lender's concentration risk generally occurs with units within a particular development/apartment complex. Which lender has stated that they view this as concentration risk? If we use lenders like Westpac and St George as an example then they will not view this as concentration risk provided the property is not listed on their security/property register.

Also don't see any issues with lending and UT's. Sure some lenders dont like it but its a small %.

Don't get one big loan though and ensure that the properties are stand alone and do not cross them. This is in case you need to do a staged development down the track.

 

Morning

Update on this in case anyone is ever in a similar situation.

After lots of research ended up borrowing from and settling with Rams - 80% lvr on low doc and great resi rates. They were the only lender to look at these houses as resi properties and not take ‘development potential’ as an obstacle. Almost all other lenders did.

Commercial lending (for the whole site) was always there as an option however the difference in rates, lvr options and the addition of risk fees when compared to the rams product did not stack up. Great outcome all around

Thanks all for replying