State Bank of India declares support for limited company buy to let

by: Heather Greig-Smith
  • 24/01/2017
  • 0
State Bank of India declares support for limited company buy to let
The State Bank of India UK (SBI UK) is to increase its support for buy-to-let investors using limited companies.

SBI UK said it recognised that changes to the tax system mean landlords’ tax could double or even triple in some cases.

UK landlords are increasingly turning to special purpose vehicles (SPVs) to mitigate the rise in costs as they are limited companies and income can be taken as dividends.

Sanjiv Chadha, regional head for SBI UK, said: “We believe landlords will increasingly use a limited company structure for their property portfolios and this trend cannot be ignored. As such we are keen to support those investing through SPVs and the mortgage brokers serving them.”

However, SBI UK said only 16% of all buy-to-let mortgages are currently available to investors through SPVs. Only a small proportion of providers offer SPV mortgages due to a perceived higher risk of lending, increased complexity and cost of underwriting the applications.

Many mortgage providers charge a higher rate for SPV mortgages. SBI UK referred to Mortgages for Business figures that show the average buy-to-let mortgage rate on the market is 3.3%, 1% less than the average rate of 4.3% for SPVs.

The bank said its average SPV rate is 3.22%, only 0.5% higher than its buy to let rates.

“SBI UK is willing to work with any professional landlord that is interested in an SPV, whether they are opening one for the first time or remortgaging an existing SPV,” said Chadha.

He added: “However, if they are considering borrowing through an SPV for the first time, they must be a professional landlord with a proven track record. An SPV doesn’t have experience, but a landlord does and that is what we will assess as a part of our underwriting process.”

SBI UK requires investors to have a minimum income from their properties of £25,000.

There are 0 Comment(s)

You may also be interested in

Bridging

Keep up-to-date with all the breaking bridging and short-term lending news and analysis, from regulatory changes to product innovation and inside market knowledge. Take a look at our broker and lender case studies showing short-term finance in practice.

Commercial

Find all the news, opinion and analysis for property finance brokers specialising in commercial and semi-commercial mortgages, alternative and development finance for commercial investments in residential projects.

Second charge

Stay up-to-date with the latest news, analysis and opinion on the secured loan market as it evolves into a mainstream finance option following European regulation on 21 March 2016.

Complex buy-to-let

Whether it’s a complicated asset or a complex customer, you’ll find out all the breaking buy-to-let news in this section. From limited companies to portfolio landlords, student lets to a House in Multiple Occupation, we’ve got all bases covered with our up-to-the-minute news, analysis and opinion.

Mortgage Solutions

Find all the breaking news, analysis and industry comment on Specialist Lending Solutions' sister site, Mortgage Solutions
Read previous post:
David Whittaker
TSLE17: Brokers urged to protect portfolio landlords from ‘guinea pig’ treatment

Intermediaries advising on buy to let should prepare to be busy in quarter two and three this year to avoid...

Close