In this article I will look at the options open to a First Time Landlord who is also a First Time Buyer.
If you are a first time landlord who already owns a main residence, you will have access to all lenders so this article does not apply. Find out the options you have available here.
You can obtain a buy-to-let mortgage as a first time buyer/first time landlord but usually the level of borrowing will be capped on a multiple of your salary, not the projected rental income of the property. This gives a level of protection to the lender. The reason for this requirement is that in the past some first time buyers used a buy-to-let mortgage to purchase a property to live in as their income did not meet residential criteria.
We have access to lenders who will base lending against just rental income but your whole financial scenario must be credible.
Personal Ownership Vs Ltd Company/SPV
BTL properties can be owned either in a personal name or as a Limited Company/ Special Purpose Vehicle (SPV). It is important that, as this is a long term investment, that the property is owned in the most tax favourable route; the choice made now will have tax implications for as long as you own the property.
There are two major considerations to take into account when deciding whether to to take the personal or Limited company/SPV route.
1) Future income tax position.
You might be a basic rate taxpayer and so not a tax issue currently with a personal buy-to-let, but will you be a higher rate tax payer in the future? This could easily be a 30 year investment.
2) Stamp Duty Land Tax (Ownership in England)
By purchasing a buy-to-let in your personal name as a first time landlord/first time buyer, you will benefit from not paying the additional 3% rate stamp duty.
The drawback is that when you purchase your main residence in the future (usually at a higher price than your buy-to-let) you will have to pay the additional 3% Stamp Duty Land Tax.
Purchasing in you personal name
If you purchase your first property as a personal buy-to-let and then subsequently purchase your residential home you can expect to pay:
| £150,000 Personal BTL | £250,000 main residence |
| £nil tax to pay | £10,000 tax to pay* |
The drawback to this route is that the higher stamp duty tax issue will apply in all future residential purchases until the original buy-to-let is sold on the open market or sold to your own Ltd Co/SPV.
Purchasing via Ltd Co/SPV
If you purchase your first buy-to-let property via a Ltd Co/ SPV and then subsequently purchase your residential home you can expect to pay:
| £150,000 Personal BTL | £250,000 main residence |
| £5000 tax to pay* | £2,500 tax to pay* |
Though there is a Stamp Duty Land Tax saving in this example, the ongoing benefit is that on all future residential purchases you will pay standard rate stamp duty.
We recommend you take legal and accountancy advice before making a decision to purchase the buy-to-let via a Ltd Company or in your personal name.
Current Lenders
As confirmed before this area of lending is very niche so the choice of lenders is low:
Current lenders personal BTL
- Natwest
- Saffron
- Precise
- Together
Current lenders Ltd Co SPV
- Precise
- Saffron
- Together
Contact us for the latest choice of lenders.
Once you have purchased your first buy-to-let you will be treated as property owner and will have access to all buy-to-let lenders.
Owning a buy-to-let in a personal name or Ltd Co/SPV will not affect you obtaining a residential mortgage in the future if it can be evidenced as self financing.
We can recommend a solicitor or accountant if required.
*Stamp Duty calculations do not include current reductions.
Why Use Neil Soundy Financial Services For Your Mortgage Advice?
- We are experts in SPV / Ltd Co lending.
- Your initial consultation is free with no obligation
What Our Clients Say
What you see is what you get with Neil Soundy FS! Very professional, very experienced and always on time. Securing mortgages on 2 properties simultaneously using SPV was unbelievable and amazing. We would always recommend Jake, a man that knows his onions, very brilliant at his job!
F Babarinde
How Much Will It Cost Me For Your Advice?
A fee of £495 is payable on completion of the mortgage and Neil Soundy Financial Services Ltd will keep the commission received from the lender for arranging the mortgage.
Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.
The Financial Conduct Authority does not regulate some forms of buy-to-lets.
We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.
Think carefully before securing other debts against your home/property. Your home/property may be repossessed if you do not keep up repayments on your mortgage.
