OneSavings Bank’s specialist lenders Kent Reliance and InterBay Commercial have become among the first to confirm new policies for landlords seeking to avoid changes announced in last year’s summer Budget.
The changes will allow those wishing to transfer existing buy-to-let property from their individual name into a company or limited liability partnership structure. A key feature is that they will accept directors’ loans or gifted equity, subject to an insolvency indemnity policy.
Following the announcement in last year’s June Budget of a phased change to tax relief on mortgage interest for landlords from 2017 onwards, incorporation of a limited company has been seen by many as the preferred means of holding investment property.
Kent Reliance’s Buy-to-Let Britain report, published in November, suggested limited company lending across the UK could exceed 56,000 in 2016, up from 30,000 in 2014.
In response to this demand, the bank will allow both new and existing customers to transfer a property from their sole name into a limited company or limited liability partnership, subject to current policy requirements being satisfied.
Existing borrowers will have access to a reduced fee retention product range and in recognition of the role of our intermediary partners in the process, procuration fees will be paid in accordance with the table below:
| New Customers | Existing Customers |
Kent Reliance | Standard new business proc fees | 0.25% |
InterBay Commercial | Standard new business proc fees | *0.50% |
*Subject to 0.50% Product fee
Adrian Moloney, sales director for OneSavings Bank, was keen to stress that these structures may not be right for everyone, and landlords should not only speak to their broker, but also access sound tax advice.
“The chancellor’s changes introduced a clear need for products designed specifically for property investors who were moving their investments into a limited company, and needed their mortgage finance to reflect this.
“Our new criteria provide a solution for professional investors who wish to manage their portfolios through a limited company structure.”
Pete Mugleston, director of Online Mortgage Advisor, called this a great move for buy-to-let specialists.
“If Kent Reliance and Interbay are now allowing existing borrowers the opportunity to effectively ‘port’ their current deals to their new companies, then this will be of great benefit, as many landlords would otherwise need to find new finance elsewhere, saving on application fees and valuation costs usually associated with arranging a new mortgage.
“With a growing number of buy-to-let lenders offering mortgages to limited companies, Precise Mortgages for example, it’s nice to see that a more competitive market it spurring on improvements in the criteria for borrowers.”
Last week FTAdviser canvassed the mortgage market, finding that only a handful of high street banks were currently assessing whether to get involved in this market, despite brokers reporting a rush to avoid next month’s tax increases.
peter.walker@ft.com
