When you have a sizeable property portfolio and a major change in your ownership structure, you need a lender who understands your position and you often need them quickly. That was the challenge facing our client when they came to Hayes Finance for help.
They had recently completed a property incorporation process to create a tax efficient structure, transferring their portfolio into a limited company. While the move made perfect sense for long term planning, their existing lender did not fully understand the change and was not able to offer terms that would work in the new setup.
With their fixed rate deal ending and a jump to the lender’s standard variable rate just weeks away, we needed to move fast.
The challenge
The client’s £2.1 million portfolio consisted of several rental properties. Following incorporation, the existing lender’s stance meant their only option would be to switch to the standard variable rate or move the lending elsewhere. With interest rates at the time, the SVR would have had a significant impact on profitability.
The goal was clear:
- Secure new lending in the limited company structure
- Find a lender who fully understood the tax planning process the client had been through
- Put a competitive long term arrangement in place before the existing deal expired
Speed was critical, but the solution also had to be sustainable. We needed a structure that gave the client flexibility for the years ahead, not just a quick fix.
Our approach
We started by reviewing the portfolio’s rental performance, loan to value position and the client’s wider strategy. With a portfolio value of £2.1 million and monthly rental income of £7,500, there was plenty of strength to work with.
YBS Commercial quickly emerged as the best fit. They had a product that worked for the client’s objectives and, importantly, they were comfortable with the recent incorporation and the associated tax planning. This understanding meant the process could move forward without unnecessary delays or complications.
The finance package we secured was a £1.1 million loan, drawn down across the whole portfolio at 53 percent loan to value. The terms were a 5 year fixed rate of 5.15 percent, interest only over 20 years. This arrangement kept monthly outgoings manageable while maximising income from the rental properties.
Overcoming the pressure of time
With the SVR deadline looming, every day counted. We coordinated closely with all the professionals involved to keep the process moving.
This included the YBS Commercial team, Mark Setchell, Pedro Lopes and Stacey Higgins, who provided excellent support throughout, particularly when it came to navigating the nuances of the case. On the legal side, we worked with Jacqueline Craig and Jane Hannaway at Blaser Mills, ensuring the transaction met all requirements for an arms length deal in the limited company. Charterhouse Accountants, David White, Usman and Raj, also played an important role in making sure the structure aligned perfectly with the client’s tax planning.
By keeping communication open and the focus on solutions rather than obstacles, we were able to meet the tight deadline and have the deal complete before the client’s existing rate ended.
The result
The client now has a single, streamlined loan across their portfolio with terms that support both their short term cash flow and long term investment strategy. The interest only structure over 20 years allows them to maintain healthy rental yields, while the 5 year fixed rate at 5.15 percent gives them stability in a fluctuating interest rate environment.
Just as importantly, the solution is fully aligned with the new limited company structure, removing the uncertainty they faced with their previous lender.
Reflecting on the case, Kieran Hayes, Managing Director at Hayes Finance, said:
“This was one of those situations where timing and understanding were everything. The client had made smart moves in terms of tax planning, but without the right lender on board, they could have been penalised with much higher costs. It was satisfying to bring the right people together and deliver a solution that works for them now and into the future.”
Why this case matters
Property incorporation can be an excellent strategy for landlords with sizeable portfolios, but it is important to think beyond tax savings. The lending landscape changes when you move from personal to limited company ownership, and not every lender is comfortable with the transition.
This case shows the value of:
- Choosing a lender who understands the bigger picture and can work with your structure
- Acting quickly to avoid unnecessary costs when a fixed rate period is coming to an end
- Having a broker who can coordinate the process and bring together the right lender, legal team and accountants to get the deal done
At Hayes Finance, we specialise in finding the right fit for complex property finance cases, whether that is securing funding in a new structure, refinancing to release equity, or working under time pressure to meet a deadline.
If this resonates with you
If you have recently incorporated your property portfolio, or you are considering it, it is worth reviewing your finance arrangements to make sure they still work for your strategy.
Our team can help you:
- Find lenders who understand limited company structures
- Secure competitive terms that align with your tax planning
- Avoid costly jumps to a standard variable rate by acting before your current deal ends
To discuss your plans and explore your options, contact Hayes Finance today.