BTL investors - beating stricter rules

Stringent new rules for mortgage lending to buy-to-let investors with multiple properties are making it challenging for some to borrow to fund their businesses.

Investors with four or more properties are affected as tough lending regulations were introduced by the Prudential Regulation Authority. Landlords who seek finance now have their entire property portfolio assessed for viability, as opposed to just the individual property concerned. As limited companies are unaffected by both these regulatory changes and the separate tightening of tax relief, it will be tempting for new landlords to choose this structure. Borrowing as a limited company will mean you pay higher mortgage rates and have the other administrative costs involved in running a company, but is likely to be cheaper in the long term. The downside, though, is that it would be very expensive for established landlords to transfer their portfolio to a company as it would create stamp duty and capital gains tax liabilities.