Specialist Buy to Let
Outside the mainstream buy to let market there are specialist lenders focused on non-standard properties, lending to professional landlords and limited companies. Specialist properties often offer better rental yields and capital growth opportunities than mainstream property however, the costs of finance are commensurately higher as well.
Non-standard properties often require greater levels of underwriting expertise and include the following:
- House in Multiple Occupation (HMO's) - typically arranged as bedsits or shared student accommodation, tenants have exclusive access to their own rooms but share part of the accommodation such as the kitchen and bathroom. HMO's now require a mandatory licence from the local authority if let to 5 or more people from 2 or more households.
- Multi-lets - these are similar to HMO's but do not require a licence from the local authority
- Multi-unit freehold blocks - these are single buildings with multiple, but separate and independent, residential units held under the same freehold title. For example a period property that has been converted into flats without establishing separate leases.
- Semi-commercial premises - also known as mixed-use properties. A typical example would comprise of flats above shops or offices.
Professional landlords make their living from residential property investment. Their borrowing requirements often sit outside the lending criteria of mainstream buy to let mortgage providers because of the size of their existing property portfolio and are often looking to transact in a limited company capacity. This can often frustrate landlords who are looking to expand their portfolio. However, we do have access to the specialist lenders who have made it their business to offer bespoke terms to this kind of borrower.
Limited Company borrowing has grown in popularity since the Government's changes to the taxation of income from Buy To Lets. Finance is available to Special Purpose Vehicle (SPV) companies, and trading companies. Typically, the directors/major shareholders of the company will give Personal Guarantees. It is extremely important that you take advice from an accountant before deciding how to structure your investment.