Buy-to-Let Lender Encourages Landlord Incorporation

Kent Reliance and InterBay Commercial, both part of OneSavings Bank, have launched a new policy to encourage landlords to incorporate their buy-to-let loans.

The new policy allows buy-to-let landlords to transfer their existing property from their individual name into a company or limited liability partnership structure.

A key feature of the new policy is that it will accept directors’ loans of gifted equity, subject to an insolvency indemnity policy.

After the Chancellor’s announcement in last year’s summer Budget that mortgage interest tax relief on buy-to-let loans will be gradually reduced from 2017, many have viewed incorporation of a limited company as the preferred means of holding investment property.

The Kent Reliance Buy-to-Let Britain report (from November), suggests that limited company lending could exceed 56,000 in 2016, up from 30,000 in 2014.

An estimated 40% of buy-to-let landlords are considering forming a limited company.

Responding to this demand, the new policy will allow both new and existing customers to transfer a property from their individual name into a limited company or limited liability partnership, subject to current policy requirements being satisfied.

Borrowers are instructed to seek professional advice from a qualified professional prior to entering into any transaction.

The policy will be even more popular after last Wednesday’s Budget announcement that corporate landlords will now be subject to the 3% Stamp Duty surcharge, due to be enforced on 1^st April.

The Sales Director at OneSavings Bank, Adrian Moloney, says: “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. We’ve also made sure that the process is as quick and efficient as possible for brokers and their clients.”