How to help limited company landlords enjoy a different kind of holiday this year
By Liza Campion | 03 August 2020
SUMMARY: Liza Campion, Head of Key Accounts at Precise Mortgages discusses the recently announced Stamp Duty holiday and the opportunities which have arisen for limited company landlords and those who’ve been thinking of incorporating their buy to let business.
This is usually the time of year when millions of us would be jetting off for our annual summer holidays, but unfortunately COVID-19 has put paid to many of our dreams of a fortnight of sun, sea and relaxation.
However, if you’re a limited company landlord, there’s still one holiday you can enjoy in the next few months – the recent announcement of a Stamp Duty holiday until 31st March 2021.
While Rishi Sunak’s Stamp Duty freeze on the first £500,000 of property purchases is good news for the housing market as a whole, it’s a great opportunity for limited company landlords and those who’ve been thinking of incorporating their buy to let business.
Let me explain why. Say you’re a limited company landlord who’s looking to grow your portfolio. You’ve seen a new investment property which is selling for £232,000 (the average UK house price)1. Although you’ll still have to pay the 3% surcharge that’s payable on second property purchases, instead of paying £9,100 in Stamp Duty you’ll now only be paying £6,960 - that’s a saving a £2,140. Imagine how much you could save if you were looking to buy more than one property. You could use the money you save in Stamp Duty to put down a larger deposit or invest in more properties.
Landlords who’re thinking of running their buy to let business in a limited company structure could also benefit. Many of them might have been put off incorporating in the past as the process involves ‘selling’ their properties to the business which would normally incur a Stamp Duty charge. The holiday means they’ll now pay considerably less tax if they do it before the end of next March. If you have a customer with a large portfolio of properties who’s considering incorporating, they could end up saving tens of thousands of pounds.
Unfortunately many lenders have tightened their criteria requirements, meaning that a lot of buyers, limited company landlords included, may now struggle to secure the mortgage they need.
It’s a similar situation for the UK’s millions of self-employed workers. The latest statistics show that 2.7 million people who work for themselves have had to turn to government schemes to help keep them afloat in recent months2. Meanwhile, a growing number of lenders are now asking for multiple months’ worth of business bank statements and confirmation from accountants that their customer’s business hasn’t been impacted by the pandemic. Many of the self-employed who’ve had to rely on support recently, may find it particularly difficult to provide this information.
So where do you turn to help your limited company customers make the most of the Stamp Duty holiday? This is where Precise Mortgages could help. We‘ve designed a range of products and criteria specifically for limited company landlords, and treat every customer as an individual, taking their unique circumstances into account and judging each case on its own merits.
With more than a decade of experience of helping brokers develop their customers’ buy to let businesses, just as we were here for you yesterday, we’re here for you today and we’ll be here for you tomorrow to provide support for your limited company landlords.
For Professional Adviser Use only
Liza Campion is Head of Key Accounts at Precise Mortgages