What is a portfolio landlord?
A portfolio landlord is a landlord that owns four or more mortgaged properties, either through a limited company or on a private basis.
• Rental income – receiving rental income from multiple properties can help to shield the landlord from void periods.
• Equity leveraging – landlords can potentially borrow against the rental properties within their portfolio in order to raise funds to purchase additional property.
• Market diversification – by having properties in different geographical locations and aimed at different demographics a landlord can mitigate the risk from rental market changes
• Return on investment – investing in property offers great potential for capital growth meaning landlords can make a substantial profit if and when they choose to sell the property.
• Research – it’s important for a landlord to research the buy-to-let market before investing, they should research areas with the highest rental demand, what the typical rental yields are in the area and opportunities for tenants in the area.
• Plan – it’s important that landlords create a plan and set themselves clear goals, thinking about what they want to achieve from their investment. A valuable piece of advice from many portfolio landlords is to start small, gain experience and knowledge that can be built upon when purchasing more properties.
• Property management – managing one or two properties may be something a landlord can do around their ‘full-time job’, however as their portfolio grows so too does the amount of time that will be needed to manage the properties. This is when many landlords will decide to hand over the day-to-day running of their properties to a letting agent, saving them a considerable amount of time.
• Creating a limited company – since April 2020 landlords have been unable to claim tax relief on buy-to-let mortgage payments, heavily impacting the profit margins of portfolio landlords. As a result, there has been an increase in the number of landlords choosing to hold their buy-to-let portfolio within a limited company, as there are a number of potential tax reliefs available to limited companies, including paying corporation tax instead of tax on rental income. Another benefit of holding a portfolio within a limited company is that certain expenses can be tax deductable.
• Exit strategy – as part of their overall plan many landlords will have an exit strategy in place, for example a landlord may want to supplement their retirement income by selling off properties.
• Portfolio lending up to £7.5m per borrower – more than 20 applications or £3m lending by referral
• Leasehold Block exposure to 20 units with up to 100% exposure possible - over 20 by referral
• No background portfolio stress test
• Additional verification (like E-Tech or EDM) is not required
• Great turnaround times from enquiry to application and offer
• Limited company lending with no rate loading
• Fast-track remortgage options to speed up completions
• No minimum income requirements