Trading Business Mortgage Brighton

What is a sector-specialist commercial mortgage?

Trading-business mortgages fund operational commercial property where the value is bound up with the business that runs from it. Unlike pure investment property, where the test is rent against mortgage cost, trading-business mortgages test EBITDA cover: the trading profit of the business covering the mortgage repayment, typically at 1.5 to 2.0x cover. Goodwill, brand, sector regulation and going-concern value all influence the lend.

Underwriting is sector-specific and depends entirely on the property type. Hotels: occupancy, ADR (average daily rate), RevPAR, brand affiliation, location. The Kings Road seafront hotel cluster (Hilton Brighton Metropole, the Grand Hotel, the Old Ship Hotel, the Royal Albion and the long tail of independent seafront hotels and B&Bs) is the deepest sub-market on the South Coast and routes primarily through specialist hospitality lenders. Pubs and bars: barrelage, EBITDA, beer-tie status, license type, trading record. Care homes: CQC rating, occupancy, weighted-average bed value, fee rates (council versus private mix). Dental practices: NHS UDA contract value, private fee mix, principal versus associate structure, surgery count. Day nurseries: Ofsted rating, registered places, occupancy, fee structure. Wedding and banqueting venues: forward booking pipeline, average spend per event, accounts seasonality. Brighton hospitality is unusually well-supported by the city's roughly 11 million annual visitors and a year-round events calendar.

Loan-to-value runs 60 to 70% typically for Brighton trading-business cases, lower than pure investment because the asset value is sector-locked and harder to repurpose if the business fails. Seafront hotel cases can flex slightly lower (55 to 65%) on listed-building or heritage stock where re-purpose options are constrained. Term 15 to 25 years; interest rates 7.0 to 9.0% pa reflecting the specialist underwrite. Different sub-sectors route to different lenders, and getting the right desk first time is the broker's entire job. Most trading-business mortgages are taken out by a limited company trading entity with personal guarantee from the operating principal, and most fall outside FCA-regulated mortgage rules because they finance business premises, not residential property.

Stamp duty land tax on a trading-business purchase follows commercial rates (0% to £150K, 2% to £250K, 5% above), and where a deal is structured as a share purchase of an existing operating limited company rather than an asset purchase, SDLT can be deferred or partly avoided. We work alongside the buyer's tax adviser on the structure before submission. Refinancing an existing trading-business mortgage (typically off a maturing 5-year fix) is a frequent reason to re-engage; the current rate environment is creating refinancing demand particularly on hotel and care home operator books across Brighton. Indicative case seed: a 32-room independent seafront hotel on Kings Road, stable occupancy and ADR underpinned by Brighton tourism and conference demand, EBITDA cover comfortably above 1.7x, purchased at £4.8M with a £2.88M facility at 60% LTV around 7.5% pa via Cynergy Bank.

Operator profiles routing through this product

• Hotel operators across the Kings Road seafront cluster (Hilton Metropole, the Grand Hotel, Old Ship, Royal Albion and the wider independent seafront stock)
• Brighton boutique and B&B operators across Kemptown, Regency Square and the Hove seafront
• Brighton tourism F&B and restaurant operators in North Laine, The Lanes and Preston Street
• Kemptown bar and licensed-trade operators along St James's Street and the Old Steine fringe
• Dental and primary-care principals (Kemptown St James's Street, Hove Western Road, Preston Park Avenue)
• Care home operators across the wider Brighton & Hove and Sussex coastal belt
• Day nursery operators (Preston Park, Hove, Hangleton, Patcham and the Hollingbury fringe)
• Independent seafront hospitality operators with year-round trading underpinned by Brighton's ~11M visitor count

Trading-Business Mortgage FAQs