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Friday, 20 November 2009 15:18 |
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 I wouldn't exactly say the buy to let mortgage market is overheating at the moment, but there definitely seems to have been some more changes for the positive. In the last couple of weeks we've seen a couple of new products come to the market - the 85% buy to let product detailed below (and also a new BTL refurbishment mortgage product).
Best quote of the last couple of weeks is definitely from Matthew Wyles chairman of the Council of Mortgage Lenders. He said the Financial Services Authority sees mortgage lenders and mortgage intermediaries as the drug-dealers at the "school gates" of the mortgage market.
He muses, "Regulators see lenders and intermediaries as the sweetshop owners - or worse, the drug-dealers at the school gates of the mortgage market, enticing innocent consumers in and then getting them hooked, for their own evil profit-driven purposes."
I just wanted to assure you that in no way, shape or form do I see myself as a sweetshop owner.
TIP OF THE WEEK 1: Using a property investment company to save tax.
Another tip from Stephen Fay - the property investors accountant. Please feel free to contact Stephen who is on hand to answer any more detailed questions - his email is
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Using a property investment company to save tax
How long do you intend to hold onto your investment property? If you intend to sell at some point, holding property in your own name is usually the most tax-efficient option. But, if you intend to hold for the very long term, or even until death, then a property investment company may be a better option.
Are you: - Likely to be increasing your property portfolio size?
- Unlikely to be selling the properties on a piecemeal basis?
- Mainly financing property purchases from your own funds (or with low LTV mortgages)?
Profits up to £300k are currently taxed at 21%, meaning where profits are retained the income is taxed at around half the equivalent income tax bills, so there are more funds available to buy further properties.
The property investment company can also be used as a retirement fund. Typically, with mortgages repaid, there will be a strong income stream, which can be paid out to the shareholders as tax-efficient dividends.
Eventually, the company itself can be sold, and buyers will only need to pay 0.5% stamp duty (much lower than direct property investment). The company can also be passed on to the next generation which allows the income paid out to be carefully controlled.
As always, call one of our advisors today for more information 01424 205 373
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