BTL - How some are easing the tax burden

They say that necessity is the mother of invention and for the BTL brigade they are having to think of ingenious ways to beat the forthcoming tax changes. I have come across a couple of possible solutions to ease the tax consequences.

The first one is the good old offset mortgage. There is one building society that is offering a potential solution to those landlords that have spare cash lying around not earning them much interest - yet to meet such a BTL investor having said that! Undeterred, one of the English building societies is introducing a competitive off set product that is to hit the market shortly. Hopefully this will encourage others to join in. Currently Clydesdale offer an offset product but it has a pretty poor interest rate.

The other way is to capital raise on your existing residential mortgage to reduce the mortgage on the BTL portfolio. This only works on the basis that you can secure a better interest rate on your resi capital raise than you are currently paying on you BTL. This should be feasible given that historically BTL rate are that bit higher than loans on resi property. Capital raising to reduce mortgage debt should not be a stumbling block to your new lender but you will need to remember that the resi mortgage will be judged on different criteria than the BTL!

As the tax situation begins to take effect I have no doubt that there will be other schemes and tricks that investors will start to utilise to ease the tax burden and I will of course update you as these become apparent.