One of Britain’s biggest private landlords is encouraging others to follow his lead by shifting property from their own name into a company structure.
In what is thought to be the country’s largest ever mortgage transaction, Alastair Kerr (pictured) has transferred ownership of his 330 rental homes in west London, saving him more than £10m in tax and mortgage interest.
Kerr had to re-mortgage his properties on a single day to take advantage of incorporation relief rules, or face a capital gains tax bill for tens of millions of pounds.
It was a move that should also save him more than £1m in mortgage interest in the next five years, according to SPF Private Clients, which arranged the transaction.
Stamp duty saving
Stamp duty was still payable, albeit at a much lower rate thanks to the current tax break. As he completed before the 31st March deadline, he paid tax on just the amount over £500,000 for each applicable property, plus the three percentage point surcharge.
Landlords are often criticised for owning properties that could otherwise house first-time buyers, but Kerr blames mortgage lenders for their woes.
“The market is tilted against them,” he tells The Telegraph. “In London you’ll have people comfortably paying £1,500 a month in rent but then the bank will say they can only afford a mortgage with £600 repayments. It’s quite clear that people can afford more than that.”
As well as urging landlords to re-examine their business, Kerr advises them to always have a plan B and to have enough time set aside to complete a purchase.
“Some transactions can take much longer than expected. You might think it’ll all be sorted in two or three months but you should set aside six,” he adds.