Occupancy

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Who lives in the property you are offering as security is one of the first questions a lender will ask. The answer decides whether the loan can be arranged as a commercial bridging loan at all.

Why occupancy matters

Churchbridge arranges unregulated, business-purpose finance. Where the borrower is an individual or a trustee, a loan secured on property becomes a regulated mortgage if at least 40% of the property is used, or is intended to be used, as a home by the borrower or a related person. A related person means a spouse or civil partner, a partner you live with as a couple, or a parent, brother, sister, child, grandparent or grandchild.

We do not arrange regulated mortgages. This means we cannot arrange finance against a property that you or a close family member live in, or plan to live in. The test includes future intention, so a plan to move in after a refurbishment, or to refinance onto a residential mortgage and occupy the property, counts in the same way as living there now. Even when you borrow through a limited company, many lenders will not accept a property occupied by a director, shareholder or their family.

What the lender will ask you to confirm

Most lenders will ask you to sign a declaration confirming that the property will not be occupied by you or anyone connected to you during the loan, and that the finance is for business purposes. Please answer these questions accurately. An incorrect declaration can lead a lender to withdraw its offer or demand early repayment.

If the property is let

If the property is tenanted, the lender will usually want to see the tenancy agreements, a schedule of rents, and for assured shorthold tenancies, evidence that deposits are protected. Where relevant, it will also ask for an HMO licence. Commercial leases will be reviewed by the lender’s solicitor. Please let your tenants know that a valuer may need to inspect, as this is often where delays begin.

Other adult occupiers

If any adult lives in the property who is not a borrower or a tenant under a formal agreement, the lender will usually ask them to sign an occupier’s consent. This confirms that their rights, if any, rank behind the lender’s charge. Please tell us at the outset who lives in the property, so that these forms can be prepared early.

Vacant properties

If the property is empty, please tell us. Vacancy affects the insurance you will need (see our Insurance guide) and may affect how the valuer approaches the property.

If you are unsure how occupancy affects your case, or your plans may change during the loan, please speak to us before applying. It is far easier to deal with at the start than at the end.