Tax Restructure Opportunity For Portfolio Landlords

As most portfolio landlords have realised, if the Summer Budget tax reforms go ahead, they will arguably be the most devastating blow ever dealt to landlords, especially those with a high gearing strategy who own properties as individuals. 

There may well be opportunities to restructure into a company without transferring assets or triggering CGT and SDLT.

Just suppose I set up a new limited company and my broker puts in an application to a commercial lender for a big loan, equal to my BTL mortgage.

The four most important questions the proposal must address are:-

1) What is the security?

2) How will the loan be serviced?

3) What is the money to be used for?

4) What is the track record of the borrower?

In my case, the answers would be:-

1) I am prepared to offer a personal guarantee secured by first charge over my BTL properties which are worth £………

2) I will grant a 25 year lease on my properties to the new company at a rent sufficient to match interest cover requirements, and of course to wipe out my tax completely. Note that the chancellors tax only applies to finance costs, not rent 😉

3) I want the money to repay my existing BTL mortgages as the tax regime is no longer effective for me. I can’t transfer the properties to the company without incurring CGT, which is sadly not available for rollover relief

4) My pedigree as a landlords is ……….

I would continue personally to be responsible for the letting and the income, maintenance, insurance etc, as the landlord, but as opposed to paying interest, I would be paying rent to the head lessee (NewCo). I would be liable to pay tax on any profit I make personally, but guess what, I doubt there will be any! 😉

All I need to do now is to persuade a few commercial lenders to consider this structure (and perhaps a few of the more commercial BTL mortgage lenders) and to negotiate decent terms. I suspect they are as worried about the Budget announcements as most portfolio landlords are (default possibilities), so I suspect they might be a lot easier for me to convince than some people might imagine, especially due to my commercial finance broking background and all of my contacts in the NACFB, both member brokers and lander patrons.

This structure is likely to be most attractive to landlords with high levels of borrowing (e.g. over £1 million)

Have I cracked the problem for established portfolio landlords like me, those of us who will be worst affected by this budget?

I will be sharing the results of my investigations with my Consultancy clients, including ………

1) details of all lenders who are willing to consider this structure, and

2) copies of the documentation I use to put such an arrangement into place

The cost of becoming one of my Consultancy clients is £1,995. Usually, this is for 6 months of telephone and email support (and one face to face meeting of up to 4 hours) but I will be sharing my research will all of my Consultancy clients regardless of when my research is completed, i.e. I will still share it even if it’s completed a year from now.

I will not be sharing my research and documentation openly on the forum, the reason being that I need to commercialise what I am doing in order to fund the costs of my research, and all necessary professional advice from specialist tax accountants and lawyers.

My Consultancy fees will not cover any costs of implementation of the strategies I share, or any bespoke professional legal or tax advice that you require.

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