New data from Companies House shows that 47,400 new buy-to-let (BTL) companies were incorporated across the UK in 2021.
This is a record number for a single year and the statistic underlines two points:
First, BTL investments remain in high demand, with more people creating companies through which to manage their portfolios. This demand is to be expected, given the average UK house price rose by £24,500 last year.
Second, it seems people are thinking more critically about how to manage BTL investments effectively. Reforms in 2017 meant that investors with properties in their personal names could no longer claim mortgage interest as an expense. Further, individual BTL investors are taxed on turnover, whereas companies are taxed on profit.
The loans provide choice and breathing space
Evidently, the combination of demand for BTL properties and the need to manage those investments in a financially astute manner is resulting in more company formations.
So, what might this mean for investors seeking a BTL loan, if they are buying as a business rather than as an individual?
Choosing the right BTL lender
Primarily, it will mean they need to approach lenders that are well versed in delivering loans to companies. Market Financial Solutions (MFS) ticks that box.
With 15 years’ experience as a leading bridging lender, demonstrating great speed and flexibility in the delivery of our products, we recently launched a new range of buy-to-let mortgages.
Speed and flexibility from the lender will often prove valuable
Our mortgages are suitable for company structures both in the UK and overseas, including offshore companies, trusts and foreign nationals. We will also lend for a wide variety of strong-yielding property types, such as large houses in multiple occupation, multi-unit blocks and holiday lets.
We are offering a super-flexible interest cover ratio from 80%, which can then be combined with rolled-up and deferred monthly payments, deferred interest of up to 1%, and top slicing. This will help achieve the right loan size, even on prime London properties, while avoiding failed transactions, delays and lost fees.
With two- and three-year terms and a bespoke approach, the loans provide choice and breathing space between bridge exits or initial purchases and future long-term financing.
BTL investments remain in high demand, with more people creating companies through which to manage their portfolios
Those who formed a BTL company in 2021, or plan to do so this year, ought to consider lenders best able to meet their particular needs. The choice in short-term finance — if, for example, they are planning to sell another property in their portfolio but first want to press ahead with another acquisition — or longer-term mortgages can be beneficial.
Moreover, speed and flexibility from the lender will often prove valuable. The BTL market is likely to remain highly competitive in 2022, which means buyers need to find lenders that can act quickly and confidently to deliver the loan they require.
Equipped with its new range of BTL mortgages, MFS is ready to answer the call.
Paresh Raja is the founder and CEO of Market Financial Solutions — a London-based bridging loan provider. Prior to establishing MFS in 2006, Paresh worked as a senior professional consultant in one of the top five management consultancy firms, and also set up an independent investment group.
