Equity Release Suggested as an Option for Portfolio Landlord Investors

Portfolio landlords are being advised to consider equity release as a way to broaden their options amidst regulatory change in the buy to let property rental sector.

There have been recent issues regarding portfolio landlords who are now unable to borrow due to the new Prudential Regulation Authority (PRA) rules. Many of them are considering selling their properties as a result of the changes, which have led to many landlords feeling strapped for cash. Under the new regulations, lenders now have stricter guidelines when lending to landlords and investors with four or more buy to let units, meaning that portfolio landlords are hit hard by the changes.

Equity release company Retirement Advantage now offers three products aimed at landlords. The products allow buy to let property investors to release cash tax-free without sacrificing elements of their buy to let property portfolios.

One of the products offered by the company, Landlord Lifestyle, has a monthly interest rate of 6.26 per cent as well as an annual rate of 6.44 per cent. Interest is increased and added to the mortgage each month.

A second product, Landlord Interest Select, has a monthly rate of 6.07 per cent and an annual rate of 6.24 per cent. Landlord Interest Select enables borrowers to pay off some, or all if they choose, of the interest charged each month.

The final option is Landlord Voluntary Select. This product has a monthly rate of 6.45 per cent and an annual rate of 6.64 per cent. It allows capital repayments of up to 10 per cent of the initial loan amount each year.

A spokeswoman from Retirement Advantage commented on the new products available in the range: ‘As with other property owners, buy to let landlords want flexibility when it comes to financing options. Equity release is now a viable route.’