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This paper assesses a £180,000 facility at 80% LTV to fund the purchase of a leasehold 2-bed apartment near the Blackpool seafront for £225,000, to be operated as a furnished holiday let. The borrower is Ms. Rachel Turner, sole director of Turner Coastal Lets Ltd (Co. No. 14056731), a recently incorporated SPV; she holds one existing standard AST let in Preston. Projected short-let income averages £1,610 per month (£19,320 per annum gross), based on an operator's appraisal of 61% annual occupancy at a £132 average nightly rate.

The strengths are yield and asset quality. Gross yield of 8.6% is the second highest in this set, the apartment is in a refurbished 2008 block with a 96-year lease and sea-facing balcony — the specific stock that outperforms in Blackpool's short-let market — and the AST fallback rent of £795 per month is agent-evidenced, giving the deal a floor that pure holiday-let plays lack.

The risks are material and compound. Holiday-let lenders underwrite on net income after operating costs (platform commission, cleaning, utilities, management — here circa one-third of gross), and on that basis stressed cover is 128% at 5.5% (£12,672 net ÷ £9,900): above the 125% floor with almost nothing to spare, and failing outright at any harsher test — at an 8% stress cover is 88%. The income itself is a projection, not a track record; the operator has never run a short let; leverage at 80% removes the equity buffer that would otherwise absorb a bad season; and the AST fallback rent of £795 per month covers stressed interest at only 96%, meaning the fallback preserves the asset but not the facility as sized.

Following rebuttals, the borrower produced the operator's occupancy appraisal and comparable-unit booking data (partially accepted — an appraisal is not a track record), and an offer of a £15,000 leverage reduction from family funds was noted but not yet evidenced (rejected until documented). The paper is confirmed at C and we recommend proceeding only with a specialist FHL lender at reduced leverage — £160,000, 71% LTV, at which net-income cover rises to 144% — with a 5-year fix, a first-season interest reserve of £5,000, and the AST fallback rent evidenced in the valuation.

The security is a leasehold 2-bed apartment on the third floor of a 2008-built block two streets from the Blackpool seafront, with a sea-facing balcony and allocated parking — attributes that materially drive nightly rates in this market. The lease has 96 years unexpired; service charge is £1,540 per annum and ground rent £250 per annum with RPI-linked reviews, a modern-lease feature the conveyancer must confirm stays within lender-acceptable escalation limits. EPC is C. The lease must also be checked for short-let/business-use restrictions — a common and fatal defect in holiday-let underwrites that has to be cleared before valuation, not after.

There is no tenancy: the unit will trade as a furnished holiday let through an established local operator whose appraisal projects 61% annual occupancy at a £132 average nightly rate — strong summer weeks, an illuminations shoulder season, and soft winters. The realistic profile is 80%+ occupancy June–September and sub-40% December–February, which is a cash-flow shape as much as an income level: the first winter arrives before the first summer's surplus if completion slips past spring. The evidenced AST fallback is £795 per month from two agent appraisals — the number that defines the downside case.

Projected gross short-let income is £1,610 per month, £19,320 per annum. Holiday-let underwriting must net off operating costs a standard BTL does not carry — platform commission, cleaning and linen, utilities, and the operator's management fee — here appraised at approximately one-third of gross, leaving net lettable income of circa £12,672 per annum. At the 5.5% stress, annual interest on £180,000 is £9,900 (£180,000 × 5.5%), giving net-income cover of 128% (£12,672 ÷ £9,900) — above the 125% basic-rate floor by £272 of annual income. That is the entire margin: a two-point occupancy miss erases it.

At an 8% stress, interest is £14,400 and net cover is 88% — a clear fail, so only a 5-year fixed product stressed at pay rate is structurally viable. The AST fallback (£795 per month, £9,540 per annum) covers the 5.5% stress at only 96% at the requested £180,000 — the fallback protects value, not this leverage. At the recommended £160,000 facility, stressed interest falls to £8,800: net short-let cover rises to 144% and the AST fallback covers 108%, converting the downside from facility-threatening to manageable. The arithmetic, not sentiment, is what drives the leverage recommendation.

The applicant vehicle is Turner Coastal Lets Ltd (Co. No. 14056731), incorporated 2025 — no filed accounts yet. Ms. Turner holds one background BTL, a 2-bed terrace in Preston let on an AST for two years with a clean record, passing its own 145% stress at 5.5%; personal credit is clean and employment income is £39,000 as a schools operations manager. Evidenced post-completion liquidity is £9,200 — thinner than this deal's seasonality really wants, which is why a lender-held interest reserve is recommended rather than relying on personal cash.

The honest gap is operating experience: one standard AST let is not preparation for dynamic-pricing, turnover-day logistics and winter cash-flow management. The mitigation is structural — a full-service local operator under a 12-month management agreement (18% fee, included in the cost stack above) — but lenders will correctly treat this as a managed first season, not a proven operation, and the underwrite prices it accordingly.

The refinance case at the end of a 5-year fix depends on what can then be evidenced: two-plus years of actual FHL trading accounts would refinance within the specialist pool on real numbers, while a weak trading record would force the AST fallback, which at the recommended leverage covers — barely — and at the requested leverage does not. This asymmetry is the deal's defining feature and the reason leverage discipline matters more here than on any standard paper in this set.

The sale exit is twin-track: Blackpool's holiday-let investor market (active, but sentiment- and regulation-sensitive — the direction of travel on short-let registration schemes is a live watch item) or the owner-occupier/second-home market for a sea-facing 2-bed in a modern block. At 71% LTV the equity cushion absorbs a discounted exit; at 80% it would not. Registration-scheme risk should be monitored annually: Blackpool is not currently a designation area, but a future licensing regime would add cost and could compress the buyer pool at exit.