Arc & Co. has completed a £1.2 million refinance for a buy-to-let portfolio of five residential apartments involving complex corporate structures and international ownership, the firm has announced.
The portfolio was held across two special purpose vehicles (SPVs), with over 75% ownership held by South African shareholders. Two properties were within a UK SPV ultimately registered to a Mauritian company.
Transaction complexity
The deal faced several obstacles, according to the firm. Most lenders offering foreign national buy-to-let mortgages cap loan-to-value ratios at 65%. South Africa’s classification as a high-risk jurisdiction further limited available lenders. The dual-jurisdiction ownership structure triggered enhanced know-your-customer requirements.
The transaction required restructuring the asset holdings, transferring the two Mauritius-owned properties to the other SPV held by the UK group. The SPV ownership was reorganised with the holding company taking a 96% share and two UK directors holding 2% each, enabling a minority shareholder waiver for the South African shareholders.
Lightfoots was appointed as dual representative on legal documentation to accelerate the process.
Deal terms
The refinance facility was provided by a challenger bank at a five-year fixed rate of 5.89%. The structure removed the requirement for South African shareholders to sign loan documents.
Dieter Kerschbaumer, asset finance adviser at Arc & Co., said: “It was great to structure a solution with the borrowers that enabled a smooth transaction and unlocked leverage that wouldn’t otherwise be available in a limited market for foreign nationals.”
The case highlights ongoing challenges for international investors seeking UK buy-to-let financing, particularly those from jurisdictions subject to enhanced due diligence requirements.
