Following tax changes which affect landlords’ ability to claim mortgage interest tax relief, many landlords are considering incorporating their buy-to-let into a company structure which will allow them to claim their tax relief.

However, a major obstacle to this is the fact that lenders for buy-to-let will only lend top individuals, not companies, which can only be overcome if the lender agrees a company loan.

Landlords looking to incorporate buy-to-let loans into a company structure are now finding that new options are opening up to them.

Kent Reliance and InterBay Commercial, both part of Challener bank, OneSavings Bank, have recently announced a new policy for landlords who wish to transfer their existing buy-to-let property from their individual name into a company or limited liability partnership structure.

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Research by Kent Reliance suggests that limited company buy-to-let lending across the UK could exceed 56,000 in 2016, up from 30,000 in 2014 as incorporation is seen by some as the preferred means of holding investment property.

In response to this anticipated demand, the new mortgage policy will allow both new and existing customers to transfer a property from their sole name into a Limited Company or limited liability partnership, subject to current policy requirements being satisfied.

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

Landlords are advised to take independent tax planning advice before entering into any incorporation schemes as there are other costs involved in the process and regulatory risk, the risk that the Chancellor makes further tax rule changes, does exist with this.

Adrian Moloney, sales director for OneSavings Bank, told yourmortgage.co.uk:

“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.”

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