Kent Reliance has started lending to customers seeking to borrow money through a Limited Liability Partnership (LLP), with a view to buying or remortgaging a property.
The decision to start lending to non-trading LLPs follows the announcement in last year’s Budget of a phased change to tax relief on mortgage interest for landlords from 2017 onwards.
The move comes after a change to Kent Reliance’s criteria was made earlier this year when it started allowing buy-to-let clients to transfer assets from their individual name to a limited company SPV or an LLP.
A growing number of landlords are expected to set up companies to manage their buy-to-let portfolios amid fears that their profits will be hit by tax relief changes.
Landlords are anticipating a dent in their profits after Chancellor George Osborne issued new rules from April 2017 restricting tax relief on mortgage interest to the basic rate, currently 20%.
The latest edition of the Kent Reliance Buy to Let Britain report suggests that limited company lending across the UK could exceed 56,000 in 2016, up from 30,000 in 2014, showing the significant rise in demand for this type of product following last year’s Budget announcement.
However, it is worth noting that setting up companies to manage buy-to-let portfolios could be costly for those landlords with just one or two properties.
“Following the Chancellor’s recent changes we introduced products designed specifically for property investors who were moving their investments into a limited company. We are pleased that we can now extend the same proposition to support LLPs,” said Adrian Moloney, sales director for OneSavings Bank.