Commercial Property Profiles Guest Houses

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Commercial Property Profiles - Guest Houses

Buying a guesthouse in the countryside or by the sea is a common dream, and for many it can become a reality. The attraction of a guesthouse is in the lifestyle benefits that it can provide to its owners, and the opportunity to constantly meet interesting visitors whilst operating a profitable business.

The UK tourist industry is booming, it is worth approximately £76 billion every year. Demand for hotel and guest house accommodation is constantly growing. To start up, it is usually necessary to raise a significant amount of finance to purchase the premises, undertake improvements and modifications and make sure that standards are met.

In order to run a guest house, it is necessary to be granted permission by the local council. The building must pass fire and safety regulations, and other licences may be necessary depending on the type of dwelling. For instance, should you wish to serve alcohol to your guests you will require a separate license.

A commercial mortgage is one way in which the required finance can be raised, particularly if some money for a deposit already exists. A commercial mortgage for a guesthouse could raise up to 85 per cent of purchase price, depending on the individual lender and the value of the property.

The type of tourist accommodation or guesthouse that you wish to purchase will influence the level of borrowing you can choose. An inland B&B away from any tourist attraction is likely to be outperformed by a guesthouse on a tourist-attractive seafront, for instance.

A lender will demand to know projected incomes for start up businesses (or trading history if you are established and re-mortgaging or mortgaging to make improvements), whether you have any experience of running a business of this type, the location of the business premises, the amount of deposit available, whether you have any adverse credit history, and the type of tourist accommodation that you wish to provide.

If 40 per cent or more of the property is residential space, the mortgage will have to conform to current FSA residential mortgage regulations, should you wish to inhabit the residential space. If you hire a manager, however, this does not apply.

Running a guesthouse can be a challenging and dynamic business, but making sure you choose the appropriate guidance and the right commercial mortgage deal should ensure the smoothest path to raising the finance.

If you are looking to borrow money for any type of property for any purpose, or for business or mortgage advice, please complete a Mortgage Enquiry Form below and we will arrange for one of our specialist mortgage advisers to contact you.

Alternatively, you can call us on 0845 108 0505.