Mortgages  

Lender updates buy-to-let policy to beat stamp duty rise

Lender updates buy-to-let policy to beat stamp duty rise

OneSavings Bank’s specialist lenders Kent Reliance and InterBay Commercial have become among the first to confirm new policies for landlords seeking to avoid next month’s stamp duty hike.

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.

The lender will accept directors’ loans or gifted equity, subject to an insolvency indemnity policy.

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Following the announcement in last year’s summer 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.

Then in the Autumn Statement, the chancellor levied a 3 per cent premium on stamp duty for buy-to-let investors and those buying second homes, driving more landlords to investigate switching properties from their name into a company or partnership structure.

Adrian Moloney, sales director for OneSavings Bank, was keen to stress that these structures may not be right for everyone, and landlords should access sound tax advice.

Pete Mugleston, director of Online Mortgage Advisor, said this is a great move for buy-to-let specialists.

He said: “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 is nice to see that a more competitive market is spurring on improvements in the criteria for borrowers.”

peter.walker@ft.com