News

She is the outstanding senior female executive of the year 2022 (East Midlands).

At UK Property Finance, we are always delighted to receive positive feedback for the services we provide. We are particularly proud when a member of the UK Property Finance team is recognised for their achievements and their contributions to the industry we work in.

That is why it is with huge pride and pleasure that we announce that our own Jade Buswell has been nominated for the ‘Outstanding Senior Female Executive of the Year’ award at the 2022 Women’s Awards. And it is with even greater pride that we can confirm Mrs Buswell has been shortlisted for the final stages of the competition.

Outstanding senior female executive of the year 2022 (East Midlands)

“The Women’s Awards are a prestigious multidisciplinary award celebrating the outstanding achievements of women. The purpose of these awards is to raise awareness, recognise, and honour the hard work and valuable contribution women of all cultures, communities, races, and beliefs in all sectors make. 2022 is our sixth year as we continue to grow. There are many ways to get involved, least of all through making a nomination or sponsoring an award category. Become part of the movement to help women see their worth.” The Women’s Awards

According to the organisers of the Women’s Awards, the Outstanding Senior Female Executive of the Year category is dedicated to individuals who have held senior roles within organisations for a minimum of three years and are able to demonstrate the outstanding impact they have had on both their company and its workforce.

Shortlisting for the Outstanding Senior Female Executive of the Year award (for the East Midlands) took place in late July, and we are now counting down to the Women’s Awards Gala Dinner and Presentation set to take place later this year.

The event has been scheduled for Friday, September 9^th, and will be held at Colwick Hall in Nottingham. Special guests set to make an appearance at the ceremony include Her Majesty’s Lord-Lieutenant of Nottinghamshire, Sir John, and Lady Peace, and tickets are already on sale via the following link:

Award Gala Event Tickets Here

Huge congratulations from the team at UK Property Finance.

Once again, we would like to congratulate Mrs. Buswell on her nomination for Outstanding Senior Female Executive of the Year and express our gratitude to all those who have supported UK Property Finance over the years.

For more information on any aspect of our business or the financial services we provide, contact a member of the team anytime for an obligation-free consultation.

 

Getting a land mortgage is rarely a straightforward task. This is mainly due to a lack of available options, as most major lenders offer comparatively few (if any) specialist loans for land.

Hence, shopping around for a great deal on a landlord mortgage typically means looking beyond the usual High Street banks.

The UK’s specialist lending community has a wide variety of loan options available for land purchases. Examples of this include development finance loans, bridging loans, commercial loans, and various other types of secured loans.

However as many of these lenders do not offer their services directly to borrowers, applications must be submitted via an approved broker.

Can I get a mortgage for land?

Yes, land mortgages are available from a wide variety of specialist lenders. However, qualifying for a land mortgage can be more difficult than obtaining a conventional mortgage.

With a traditional home loan, the funds are secured against the property you are purchasing. With a land mortgage, the property has not yet been built. Therefore, if the lender issues a loan that also covers the costs of building the property, they are taking a much bigger risk.

Lenders, therefore, need to see evidence of what the borrower intends to do with the land after it has been purchased. A full independent valuation of the proposed property or development must also be provided, which will be used as the basis for the maximum loan value issued.

What are the different land mortgage options available?

Specialist lenders offer a variety of different types of land mortgages, in accordance with the requirements of the applicant. Examples of these include:

• Self-build mortgages
• Agricultural mortgages
• Woodland mortgages
• Development Finance

Ensuring you apply for the right mortgage is essential in order to get the best possible deal. If in doubt, consult with an independent broker, who will ensure you understand the unique features of the land mortgage options available.

Do I need to get planning permission ahead of time?

Not necessarily, but it will certainly broaden your borrowing options. When planning permission is granted on a plot of land, its value increases significantly. It also reassures the lender that your plans for the land can go ahead.

Obtaining a mortgage for land without planning permission is still possible but can be much more difficult. If you intend to apply for planning permission in the future or have other plans for the land you are purchasing, your broker will advise on the appropriate loan options.

What are the different types of planning permission for land?

There are two main types of planning permission that can be obtained for a plot of land. Both of which could significantly boost your chances of qualifying for a competitive mortgage:

Outline planning permission (OPP)
This is an agreement in principle issued by the local council, where one or more dwellings are to be constructed on a plot of land. OPP agreements are valid for a limited period of time (typically three years) and will need to be renewed once they have expired.

In order to qualify for a land mortgage after obtaining planning permission, your lender will expect to see formal evidence of the following:

• The overall layout of the proposed dwelling(s)
• The appearance of the dwelling(s)
• Upper and lower limits for the height, width, and length of the dwelling(s)
• Site access details
• Landscaping proposals

Full planning permission (FPP)
Typically valid for a longer five-year period, full planning permission is granted upon meeting more extensive criteria. An application for FPP must satisfy all the requirements above, supplemented with detailed scale drawings of the property (or properties) and more detailed information.

FPP is always desirable in the eyes of lenders, as it adds considerable value to any plot of land. With FPP, a plot of land becomes more attractive to potential buyers, making it a safer asset to secure a loan or mortgage against.

What needs to be in my financial plan?

A detailed financial plan will need to be presented as part of your application. This is essentially a summary of all estimated construction costs, along with estimated labour costs, the logistics of how the property will be constructed, contractors who will be involved in the project, and so on.

Essentially, this is where you need to convince your lender that your project is not only viable but also economically sound. In addition, almost all lenders impose restrictions on the types of properties they will lend against and even the materials they are made of.

For example, brick-built properties are the only acceptable properties for some lenders.

Your financial plan, therefore, needs to be as detailed and comprehensive as possible. The clearer you outline your intentions and the specifics of your project, the more likely you are to qualify for funding.

How do land mortgages work?

Land mortgages work similarly to development finance loans, in that the funds are released in a series of stages. For example, the first instalment may be released to cover the costs of the land itself, followed by several subsequent instalments for key phases of the construction project.

This involves the use of surveyors hired by the lender to monitor the progress of the project. When the bank is satisfied that a key phase of the project has been completed, they will release the next instalment.

It is also possible to arrange a land mortgage that is paid in the form of a single lump sum. Bridging loans, for example, can be arranged and accessed in a matter of days, making them ideal for time-critical purchases and investment opportunities.

When the construction project is complete, the land mortgage can be repaid in the same way as a conventional mortgage. Or, in the case of a shorter-term facility, transition to a longer-term repayment loan.

There’s also the option of selling the property upon its completion in order to repay the loan in full and retain the profits.

How high are land mortgage rates?

Interest rates on land mortgages vary significantly from one product and provider to the next. As a general rule of thumb, the lowest rate you can expect to be offered is around 3%, but a more typical land mortgage rate would be around 4.5%.

With short-term funding options like bridging finance, interest is charged on a monthly basis, often as low as 0.5%. This could make a promptly repaid bridging loan a uniquely cost-effective facility, with no additional fees or penalties payable for early repayment.

How are land mortgage fees charged?

Additional borrowing costs vary on the basis of multiple factors, including the type of mortgage taken out and the issuer.

As with any mortgage, you will incur fees that you will need to consider before applying, such as:

• Application Fees: Also known as arrangement fees, processing fees, and admin fees, which can be anything from zero up to 2% of the value of the loan,
• Valuation Fees: The lender will want to see a formal valuation of the project’s estimated final value, provided by an approved surveyor and paid for by the borrower.
• Legal Fees: All legal fees and conveyancing fees must also be covered by the applicant, which may be charged as a flat fee or a percentage commission on the value of the loan.

Comparing the market with the support of an experienced broker holds the key to getting an unbeatable deal, irrespective of the type of land mortgage you apply for.

Can land be refinanced?

It is always advisable to consider refinancing options as soon as the project is complete. This is due to the fact that interest rates and borrowing costs on land mortgages have a tendency to be higher than those of conventional mortgages.

If the home (or homes) constructed on the land qualify for a standard residential mortgage, significant savings could be made. However, even bigger savings could be made by using a short-term facility (such as a bridging loan) to cover the costs of the project and repay the full outstanding balance as quickly as possible.

For more information on any of the above or to discuss land mortgages in more detail, contact a member of the team at UK Property Finance today.

Established and aspiring landlords alike continue to question the potential benefits of purchasing BTL properties via a limited company. Understandable, given the government’s no-holds-barred approach to BTL legislation over recent years.

Landlords were first hit (and hard) back in 2016, when the government introduced a new 3% stamp duty level on BTL property purchases. Next, policy reforms slashed mortgage and loan interest relief on second homes, which would eventually be removed entirely by 2021.

2019 brought more bad news for landlords in the form of the Tenants Fees Act, imposing much greater restrictions on what tenants could and couldn’t be charged for by property owners.

Whichever way you look at it, turning a profit as a private landlord is becoming trickier all the time. But as demand for quality rental homes skyrockets and average monthly rents break every record in the books, there’s still good money to be made with savvy BTL investments.

In total, the value of the UK’s BTL sector has grown from £239 billion in 2017 to more than £1.7 trillion today.

“There have been many challenges that have subdued investment into the private rental sector over the past few years,” comments Stephen Clark a bridging finance broker.

“But the sector has proved resilient, and we have seen continued demand for finance in this vibrant part of the economy.”

Safety and stability

The property market, in general, remains a relative safe haven for investors. Even the catastrophic events of the past two years have done nothing to quell the public’s appetite for quality homes in desirable locations.

In fact, figures from Nationwide suggest that from March 2020 to December 2021, average house prices in the UK grew by more than 16%.

Responding to demand from homebuyers and investors alike, major banks have been diversifying their mortgage portfolios as of late. BTL mortgage products, in particular, are available in abundance; there were more than 2,235 specialist mortgages at the end of last year.

What’s more, many banks have also been cutting interest rates on five-year fixed mortgages for BTL borrowers as a means to encourage more landlords to make their moves.

“The BTL sector has faced its share of upheaval and changes to regulations and requirements, so it is highly encouraging to see that providers are still keen to attract first-time landlords,” said Eleanor Williams at Moneyfacts.

“Rents have risen at the fastest rate on record, while tenant demand has almost doubled.”

Still, with inevitable Bank of England base rate hikes on the cards, mortgages across the board are not going to get any cheaper than they are now.

But when it comes to maximising profits and minimising tax liability on a BTL property, is it better to purchase homes through a limited company?

The pros and cons of limited company investments

Forming a limited company to purchase real estate is not something that should be done without careful forethought. In addition, the advice and input of an experienced broker could prove invaluable.

From a general perspective, the benefits of using a limited company to purchase a BTL property are as follows:

• All profits generated on limited company BTL property purchases are subject to flat-rate corporation tax at 19%. By contrast, private landlords are subject to standard income tax bands, which are 20% in the normal band and up to 45% for higher-rate taxpayers.
• Mortgage interest is classified as a business expense for limited companies, meaning it is tax-deductible. For private landlords, a tax credit of just 20% can be claimed on mortgage interest payments.
• Revenue withdrawal options are also broader. All profits received by private landlords are taxed, whereas profits taken out of limited companies are only taxed once.
• There are also options for decreasing overall tax liability, such as forming a family investment firm or a limited liability partnership. Assets can also be transferred to family members to avoid or reduce inheritance tax.

Downsides also apply with limited company BTL investments, including the following drawbacks:

• Mortgage options are much more limited for businesses looking to purchase BTL properties, and it can be more difficult to qualify.
• Larger deposits are the norm for these kinds of property investments, along with higher rates of interest and elevated borrowing costs.
• Along with corporation tax, dividends withdrawn from the company are also taxable.
• In order to transfer a property you already own into a company holding, it needs to be sold in the normal way. This means paying stamp duty at the normal rate, along with all associated conveyancing and legal fees, plus capital gains tax.

Despite this fairly even split of pros and cons, more landlords are purchasing properties through limited companies than ever before. In fact, the figures suggest that around 80% of all BTL mortgages are being issued to limited companies.

“Getting the ownership structure right might make a tremendous difference in the amount of tax you pay throughout your lifetime,” commented Rob Dix (the Property Geek).

As a general rule of thumb, experts advise considering forming a limited company where a landlord has a minimum of three private rental properties. By contrast, landlords with two properties or a single rental home may find it more cost-effective to simply hire an accountant to oversee their affairs.