Landlords and property investors have recently been the victims of some adverse changes to the tax treatment of rental income from buy to let property. Landlords were further disappointed this week, as the Autumn Statement revealed no alteration to stamp duty or the planned changes to mortgage interest relief.
Additionally, the abolition of letting fees means agents will be forced to shift fees on to landlords, placing further strain on the buy to let investment model. Richard Lambert, NLA chief executive, commented in the Financial Times that by ‘Adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents.’
Thus, Philip Hammond’s Statement has been branded by many as a ‘missed opportunity’ by the government to support buyers who invest in the private rented sector.
In response to these challenges, many lenders have been thinking creatively about how to help these customers maximise the returns they can generate from their portfolio. You can expect to see further innovation in this market.
We work with a lender which specialises in helping buy to let landlords to increase their borrowing on existing assets without impacting adversely on cashflow. By offering buy to let mortgages which allow interest to be partially or wholly deferred, this lender can help you release capital which can be used, for example, to refurbish existing assets, subsidise a cashflow deficit elsewhere in the portfolio or to acquire further property.
The lender concerned typically lends on a fixed rate basis and, as there are no mandatory monthly payments, the lender does not apply a rental income stress test to its lending. This is particularly attractive for low yielding assets.
Loans are available on a first or second charge basis, up to a maximum 80% loan to value and you can choose a term from 1 year to 5 years. There is no maximum age and the maximum loan size is £10 million.
As every case is individually underwritten, the lender can also consider more complex circumstances, such as portfolios, houses of multiple occupation, untenanted properties and holiday lets as well as loans to expats, foreign nationals and non-domiciles.
If you are interested in this product, have any questions for our expert brokers about the market or wish to be introduced to the relevant lender, please do not hesitate to get in touch.