The Buy-to-Let market in many ways has now become very complex for landlords, especially those looking to build or expand a portfolio.
Changes to the market such as second property stamp duty, limitations to mortgage interest tax relief, criteria and underwriting changes brought about by the PRA (the lender’s regulator), have all contributed to the market complexities.
Most mortgage advisers can assist their clients who are looking for standard Buy-to-Let on their first or second property by using High Street style lenders with whom they are familiar. However, when the client’s requirements are more complex, a mortgage adviser will need to invest time in building their knowledge in this specialist market and they may also need to be able to access more niche BTL lenders and commercial lenders to satisfy their client’s needs. This is when specialists like ourselves at Connect can help. Some of the more complex buy-to-let areas we can assist you with are:
A client with 4 or more BTL’s, including the subject property, will be subject to specialist underwriting. This means they will need to supply documents such as a business plan, a cash flow forecast, an asset and liability statement and full details of the existing property portfolio. Connect can help you to put all these together so they can be presented to the lenders in their best possible light for success.
HMO’s and Multi-Units
This type of BTL covers a range of property layout types from a 3-bedroom-2 storey property let to 3 students on a single tenancy agreement, up to a 10-bedroom-5 storey property let to DSS tenants. Understanding legally which of these requires a HMO licence is the first challenge. Connect can assist initially by letting you know what the key questions are to ask the client and then finding the right lender solutions depending on the answers.
Expats and Foreign Nationals
Not every lender will consider a BTL for an applicant who is not resident in the UK. British Expats are better catered for with over 30 lender options on Connect’s panel. The lender’s criteria for Expats does differ from the criteria they offer to UK residents. For Foreign Nationals the market is more limited but we are still able to help a range of Nationalities and those who wish to purchase via offshore companies.
Limited Company BTL
These mortgage types have become more popular since the tax changes, as mortgages held inside a limited company can still offset the full mortgage interest against the rental income. Understanding the type of company being used and who the Directors and Shareholders are can influence which lenders would consider the company. Connect can help you source the most competitive from an extensive range of lenders.
Your client’s complexities may sit in one of the above categories, or you may just be struggling to raise the capital they need due to the rental income. With lenders that can consider your client’s earned income to lenders with low rental calculations or no calculations at all, we can help!
Tax ChangesKeeping yourself and any landlords among your clients informed about BTL tax changes is essential. New legislation has altered what landlords can claim as a tax exemption, as well as the amount of tax they pay. Our CEO Liz Syms has written a chapter in the ‘BTL Property Tax Handbook’ for Accountants, published by Bloomsbury. Her chapter outlines all the salient points about BTL mortgages to assist accountants and also mortgage advisers when considering the tax implications for their clients. When you register with Connect for news and updates, we will send you a link to a free copy of this chapter.
If you are a Directly Authorised Adviser or obtain your permission to trade through another Network, you can still tap into Connect’s specialist knowledge, lender relationships and exclusive products by using us to package your client’s applications for you. More.