Portfolio Finance

Landlord tax changes and new buy to let affordability assessment rules have caused an influx in the popularity of purchasing investment properties via an SPV limited company, especially for those who own investment properties already and/or are higher rate tax payers. A portfolio landlord is defined as an individual that has 4 or more investment properties. Lenders now need to assess the financial viability of every property in a landlord’s portfolio when deciding whether to offer them a further loan, which has caused many of these landlords to purchase further properties via a limited company. This is often deemed more tax efficient and creates a separate ownership entity.

Advantages:

  • Corporation tax on profits and capital gains at 19% as at 6th April 2020.
  • Ability to offset finance costs including residential mortgage interest as an expense.
  • Control on when and how the rental income is generated. This means drawing income can be deferred until your clients income reduces, for example, in retirement.
  • Your clients can add additional shareholders such as spouse and children to get the income out of the company in the most tax efficient manner.
  • Succession planning for future generations in terms of passing on shares in the company over time to allow estate planning in a tax efficient way.
  • Leverage more against the property income if there’s future plans to raise additional funds for further investment and growth.
  • If the decision was made to sell the property held within a company in the future, the profit achieved would be subject to Corporation Tax at 19% rather than 28% as a higher rate taxpayer.
Disadvantages:

  • Personal tax when funds are drawn from the company at your clients marginal rate. Higher rate tax payer could pay 19% corporation tax within the company and then an additional 32.5% personal tax on dividends after the current £2,000 dividend allowance.
  • Additional accountancy fees
  • Lose ability to offset the personal £12,300 capital gains allowance on the sale of the property.

Whether it be finance for a limited company property or finance for a portfolio landlord who is continuing to own personally AdviserFinance has a wealth of experience in this sector and have established robust relationships with longstanding and new lenders to this specialist sector.

Areas we can help:

  • Flats above commercial premises
  • Multi-units
  • Personal income/asset top-ups for rental coverage
  • Limited liability partnerships
  • Holiday lets
  • Flexible rental calculations
  • Portfolios 3+ properties
  • No minimum income/self-funding buy to lets
  • Refurbish-to-let
  • Short-term lets

Why choose it?

With our support, your clients can successfully re-mortgage or purchase properties personally or within a company.

  • Portfolio landlords (4+ properties)
  • Mortgages in personal name, limited company/LLP (SPV & trading companies)
  • Flexible rental calculations
  • Personal income/asset top-ups for rental coverage
  • High value properties
  • Large portfolios
  • Houses of multiple occupancy and student lets
  • Multi-units (i.e. four flats on one freehold title)
  • Short term lets (Airbnb and similar)
  • Holiday lets
  • Unusual property types
  • Listed buildings
  • Flats above commercial premises
  • Refurbish-to-let products
  • Day one re-mortgages
  • No minimum income/self-funding BTLs
  • Ex-pats and foreign buyers
  • First-time buyers and first-time landlords
  • High loan to value mortgages
  • Adverse credit history

Criteria

  • Market-leading rates
  • Fixed and variable rates
  • Interest-only options
  • Products with no fees, no ERCs and cashback deals.
  • Lending in England, Scotland and Wales

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