Buy to let (BTL) landlords have faced a raft of changes over the last year. One of the most significant hurdles has been the phasing-in changes for BTL investors in regards to tax relief. These changes will phase out the ability to claim tax relief on mortgage interest, leaving landlords to face higher tax bills.
However, this change is only applicable to private individual landlords, as opposed to landlords who own property via a company. This has led to a significant increase in the number of landlords purchasing BTL through Special Purpose Vehicles (SPVs), ‘a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.’
Now, reports show approximately 77% of BTL purchases are now being made via a corporate vehicle such as an SPV. The Enness Mortgages team have certainly recorded an uptick of applications structured in this way, in addition to a significant boost in applications from foreign investors. This makes great sense in light of the tax relief changes—but this isn’t the only way our clients can make savings. Mortgage protection for foreign investors is also an essential product which we can help you find the best deal for.
London has been and forever will be a safe haven for foreign investment, and because Enness is so successful at arranging finance for UK properties for our international clients, we wanted to find easier, more cost effective ways of arranging global insurance to cover mortgage debts.
Structuring BTL mortgage protection for foreign investors
As touched upon above, any mortgage liabilities for BTL properties held within a SPV will therefore be those of the SPV (i.e. the company), and therefore the mortgage cover required will be ‘business loan protection’, as opposed to normal mortgage insurance.
Business loan protection is effectively just mortgage protection, but with a company owning the policy instead of an individual.
If the SPV (company) is set up off-shore (i.e. IoM, Jersey etc.) we can arrange UK based life insurance to protect your mortgage. Local insurance rates are usually a fraction of the cost for international cover – meaning it is more cost effective for our global clients.
For business loan protection we can possibly also consider Critical Illness Cover (CIC) depending on where the life assured is resident.
Whatever your insurance requirements are, it’s likely we can help—get in touch below for more information.