While some, very large-scale portfolio landlords might well have housed their properties within a limited company structure, this was still a very small minority, and the advice tended to be that – unless you had a portfolio of a considerable size – then the costs of doing this were prohibitive and, quite frankly, not worth it.
Fast forward to the here and now, and we find ourselves in an altogether different environment, one which has been clearly shaped by the changes to mortgage interest tax relief to such an extent that, according to recent research by BVA BDRC, 64% of portfolio landlords – now defined as those with just four or more mortgaged buy to let properties – are thinking of buying their next property via a limited company, compared to just 7% of non-portfolio landlords.
We should however warn mortgage advisers here that it is not up to them to decide on the option a landlord should take. The tax situation for each individual will be different and they need to take tax advice before opting to go down the limited company route. However, when they perhaps reach that decision, the good news is there is an attractiveness to the mortgage options available that simply were not there just a few years ago.
Over the last couple of years we’ve not just seen more lenders entering this part of the market, but the price discrepancy that once existed is, either not there at all, or very slim, compared to what it used to be. We offer the same products and fees to limited company purchases/remortgages as we do for those applying in their individual names, so the range is open to all.
Specialist lenders like ourselves also now offer options for limited company lending in areas where landlords are increasingly looking to ensure greater yield, for example, in HMOs or multi-unit blocks, and there’s a growing flexibility in terms of the way we look at the borrower and the company set-up.
For instance, we accept newly-incorporated companies specifically set up for a purchase, plus we’ll allow up to four directors of that company and there is no maximum age for those directors. This is important for those who have held property for some time as an investment and want to continue to do this into, and beyond, what we might deem a traditional retirement age.
Overall, advisers operating in the buy to let space, and particularly when it comes to portfolio and professional landlords, now have a far greater number of options for them and their clients. You should however be aware that this part of the market can be complex, and it’s therefore important to deal with a specialist who can look at cases individually and find a pathway through the complications. This is not a market which requires a tick-box approach but underwriting which goes far beyond this – make sure you work with a lender committed to this and you are likely to find a growth business area that can offer opportunities for many years to come.