A year on from our entrance into the Limited Company Buy to Let space, we continue to monitor movements and trends across the sector in what was a trying year for many landlords.
According to Hamptons estate agents, landlords setting up Limited Companies accelerated in 2020 with an increase of 23% on the previous year.
2021 marks the five-year anniversary of the 3% stamp duty surcharge which led to a clamouring from landlords to secure 5-year fixed rates before the implementation.
This of course represents a big opportunity for brokers, and there’s sure to be plenty of landlords who are now operating in a limited company structure who may be looking to re-arrange their portfolios.
By starting these conversations early in the year, brokers can get ahead of the rush and ensure that all avenues can be explored with their customers in good time.
Purchasing to continue
On the purchase side, there may be a rush to complete before the return of SDLT, but there’s an increasing belief that there will be no cliff-edge effect come 31st March.
On the contrary, there are predictions that there will be a portion of the landlord community who are waiting for less competition for properties and the potential of a reduction in house prices.
This has been ratified by a sample of brokers who we recently surveyed, with 60% predicting that purchase activity will remain the same following the stamp duty holiday.
How Pepper Money can help brokers with Buy to Let
Pepper Money continues to offer both Limited Company & Private/Individual Buy to Let ranges via our distribution partners.
In our recent survey, two key challenges were identified by brokers when selecting a lender for their landlord clients. They were Interest Cover Ratio (37% of the vote) and approach to background portfolio (32% of the vote).
These are areas that Pepper Money can help brokers and their landlords with.
We have a favourable Interest Cover Ratio, particularly on 5 year fixed rates where we’re able to use 125% of the pay rate for Limited Company landlords and 140% for private/individual landlords. This is irrespective of the applicant tax band.
Our approach to background portfolios means there’s no cumulative LTV gearing limit, and we don’t stress the customer’s other properties in the background.