There are many questions surrounding Buy to Let.
So whether you are investing in Buy to Let properties for the rental income or for the potential capital appreciation, choosing the right mortgage is essential. Not least because it is fraudulent to either let a property while only paying for a residential mortgage, or to move into a property that you have told the lender you are renting out.
If you’re not sure how Buy to Let mortgages differ from residential mortgages or need more advice on how to get a Buy to Let mortgage, please talk to our experts.
Lenders are willing to provide buy to let mortgages to Limited Companies. However, they do not like lending to trading businesses and prefer SPV’s so that assets and liabilites are easier to see and control.
If the Company receives income from normal business activities, not solely property letting, then they are unlikely to lend as this is a trading company, not a SPV.
A SPV (Special Purpose Vehicle) is very simply a Limited Company that has been set up for the sole purpose of investing in and letting residential property. When the Company is being set up at Companies House you will need to use the correct SIC code and this determines the Company’s principal business activities.
It can take only a day or two to set up a new SPV. This can be done online via a DIY website or you could ask your accountant to set it up. Whichever option you choose, remember that setting up a bank account for this new entity can take many weeks, so allow enough time for this to be completed.
Using a SPV for buy to let investing and property portfolios is now very common and the lenders are more comfortable with the purpose and structures. However, you need to seek tax advice based on your own circumstances before setting up a SPV. They cost money to set up and run and won’t work for everyone. So speak with your tax adviser for further guidance.
As property investors and landlords ourselves we know the upsides and downsides to owning and renting property.
With our extensive access to the major Buy To Let lenders, we are very happy to hear about your problems, projects and future plans as well. Some issues just need another point of view before an outcome can be visualised and planned for. That’s an area that we are particularly good at.