Buy-to-let Indian take away

The State Bank of India has confirmed ambitious plans to become a buy-to-let mortgage lender for UK landlords who own their properties within a limited company structure.

As from April this year, landlords will lose the ability to offset their mortgage interest against rental income before they pay tax, but those with properties held within a limited company will still be able to claim tax relief.

The bank's plans to expand follow a series of tax changes brought in by the Government over the past 18 months that make buy-to-let’s less profitable for many.

The bank, a Fortune 500 company, is India's largest and already provides some of the most competitive savings rates available to UK savers.

Transferring properties to limited company ownership involves hefty set-up costs as well as other tax complications. It is expected that many landlords will be forced into incorporating in order to maintain profits.

Those landlords will be able to offset all mortgage interest against rental income before they are charged corporation tax at 20% on profits. If they want to take money out of the company they will face further tax on dividends or earnings, or they can roll up profits within the company over the years.

Earlier this year State Bank of India launched a small range of buy-to-let mortgages and began lending to UK landlords whose circumstances were slightly out of the ordinary. From the start, the bank focused on providing competitive mortgage rates to landlords who own slightly larger buy-to-let portfolios with multiple properties held in special purpose vehicle limited companies.

Since then, they have seen demand accelerate and have now confirmed plans to increase limited company buy-to-let lending significantly.

Can we help:

If you are looking for a new or re-mortgage (buy-to-let) please do contact one of our qualified advisers and they will be happy to help.