Starting your buy-to-let journey can feel overwhelming, especially as your property portfolio grows. As a landlord, you may face challenges requiring careful thought and planning. Some lenders might find these issues difficult to address. However, we view them as chances for growth and success.
Let’s look closely at key factors that could affect your decisions when diversifying or growing your buy-to-let investments.
Read on to discover some challenges and opportunities you may encounter as you expand your buy-to-let ambitions.
Buying buy-to-let as a limited company
Purchasing a buy-to-let property through a limited company can help reduce costs. Landlords must now pay tax on most rental income and cannot deduct mortgage interest costs due to tax code changes. As a result, higher-rate taxpayers may face increased taxes and struggle to profit from their buy-to-let properties.
However, landlords establishing limited companies are exempt from these rules and pay corporation tax on their earnings. Setting up a company for a buy-to-let property can be complex, so seeking professional advice before proceeding is essential.
Houses in Multiple Occupancy (HMOs)
In England and Wales, an HMO is a property with at least three tenants who share toilet, bathroom, and kitchen facilities. In Scotland, an HMO has at least three renters from three or more households sharing basic utilities.
Many landlords invest in HMOs in the buy-to-let market, especially in university towns and cities where students share accommodation. However, several lenders decline to finance these properties because of their complexity. Loan requests often exceed maximum lending limits, and income assessments can be challenging due to multiple tenants.
Multi-unit freehold properties
In England and Wales, an HMO is a property occupied by at least three tenants who share toilet, bathroom, and kitchen facilities. In Scotland, an HMO is defined as a property with at least three tenants from three or more households sharing basic facilities.
HMOs are popular among landlords in the buy-to-let market, especially in university towns and cities where students share accommodation. However, many lenders are reluctant to provide financing for these properties due to their complex nature. The requested loan amounts often exceed maximum lending limits. Additionally, assessing income can be challenging because multiple tenants are involved.
Portfolio size
As your property portfolio grows, your mortgage needs may become more complex. You might face challenges securing mortgage financing near the end of their initial term. You could also encounter issues if your portfolio exceeds the maximum limit set by many lenders.
Working with a specialist mortgage provider is essential when portfolio size becomes a concern. Connect Mortgages understands the unique needs of property investors. We assist clients with larger portfolios and help address any challenges that arise.
We have access to many lenders who consider portfolio investors and offer flexible solutions. Our experts will work closely with you to understand your goals and find the most suitable financing options.
Don’t let portfolio size hold back your growth as a property investor. Contact Connect Mortgages today. Let us help you secure the right mortgage solutions for your expanding portfolio.
Assessing your income
It’s possible your income, rather than your buy-to-let property, is causing some challenges. Many banks and high-street lenders may struggle to assess your income if you are self-employed, contracting, freelancing, or running a limited company. This is because you do not work a standard 9-to-5 job, even if your earnings are substantial.
You can still demonstrate your income and affordability, although you may need to provide additional documents. This should not stop you from applying for a buy-to-let mortgage.
Corporate lets
A landlord often aspires to rent out their property to a large blue-chip company. With a corporate tenant, landlords can typically charge higher rents. Additionally, these tenants are less likely to default on payments. However, specific criteria must be met to secure this type of tenancy.
Connect Mortgages is here to help you secure a buy-to-let mortgage, even if you face complex requirements. Our team specialises in the buy-to-let market and offers tailored solutions to match your needs.
Whether you need assistance with portfolio size limits, limited company structures, HMOs, non-standard properties, or rental income evaluations, we have the expertise to guide you. Contact us today to discuss your goals, and let us help you achieve them. We look forward to hearing from you soon.
Thank you for reading our “Complex Buy-to-Let Mortgages | Talk to Connect Experts” publication. Stay “Connect“-ed for more updates soon!
