There is growing interest in setting up a buy-to-let (BTL) limited company from UK expats, as general demand in the market is proving resilient, Nathan Waller, business development manager (BDM) at Family Building Society, said.
Catching up with us after the mutual launched its expat limited company BTL product, Waller told Mortgage Solutions that the decision to introduce this offering had been on the cards for a while, particularly as limited company structures grew in popularity following landlord tax changes.
Waller said this was becoming more mainstream, and where some people emigrated and had properties in their portfolio under a limited company wrapper, while in the UK, not every lender was happy to see that the borrower had since relocated.
“Where clients are looking at long-term planning, there are a lot of benefits to having a limited company in case they do return to the UK and become a higher-rate taxpayer and get stung for the income they have in their personal name,” Waller added.
He said people were thinking about how taxes in the UK might change in the future, and felt that a limited company also made it easier to pass investments down to family members by simply allocating shareholding to them.
Waller predicted that the general limited company BTL trend would continue, especially in light of recent rumours around the Budget, adding: “It seems to be pointing more in that direction where there are changes happening, it’s pushing everyone to limited company structures”.
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He said proposed changes would make the market more professional, yet noted that it could be a “barrier to entry” for the average person who saw property as a casual investment.
“That’s being got rid of now and [the BTL market is] now becoming more for the seasoned investors who look at it as a business,” he added.
Waller said in some ways, it was a good thing that the BTL market was going in this direction and said if the government did decide to apply National Insurance to rental income, it would continue further along this path.
There has also been a pattern of people who had already left the UK to live abroad who were now looking to invest in UK property and had either set up a special purpose vehicle (SPV) or were in the process of doing so, and Waller said Family Building Society received enquiries about this on a weekly basis.
“There are people who are starting their journey in BTL from abroad. Sometimes, when they move abroad, they might not want any financial ties to the UK as they are unsure about how things will pan out, but once they become more settled in their new location, they want roots in the UK in case they return in the future,” he added.
A sturdy market
Waller said the fact that people living abroad were still interested in investing in the UK property market was a sign it was in a good place.
He added: “For those brought up in the UK, they understand what they are getting into. They’ve seen ups and downs, lefts and rights, no matter how you look at it, it’s a relatively stable investment in some way, shape or form.
“The amount of business and enquiries we’re still getting tells me people aren’t scared away – the market seems to be fairly resilient. A lot of changes have happened, but BTL is still moving forward.”
He said there were also suggestions that the market would soon return to levels similar to 2022, before the mini Budget.
Waller said the Renters’ Rights Bill would consolidate the BTL market towards professional landlords, though it could change the way investors approached the market, as they may not have as much fluid cash.
He said a lot of people were focused on the “doom and gloom” in the market, and although it was harder for investors to navigate than it was 15 years ago, said there was plenty of BTL mortgage choice, rates were set to go lower and it was about “weathering the storm, looking at it as a business and planning accordingly”.