Equity release for landlords

Squeezed buy-to-let investors will soon by able to release cash from any of their rented properties without being forced to sell.

Equity release schemes, which allow cash to be released from properties which is normally paid back from the sale of the property after the owner’s death, have grown dramatically in popularity in recent years.

More than £2bn was released from homes across Britain in 2016, and Legal & General, the biggest lender, has predicted that the total will pass £3bn this year.

Buy-to-let investors have been increasingly targeted by a raft of reforms introduced by George Osborne, the former chancellor.

The 3 percentage point stamp duty surcharge on second properties has made it far more costly to expand buy-to-let portfolios. Changes to tax relief on mortgage interest from April this year are already forcing down profits and new “stress tests” being applied by lenders may make it harder to secure cheap mortgages.

Retirement Advantage’s “landlord options” range gives borrowers the choice to pay off the full amount at the end of loan, pay the interest on the loan during their lifetime, or pay off up to 10pc a year without an early repayment charge. Interest rates range between 6.07pc and 6.45pc, depending on which option is chosen.

Landlords will be able to take out loans on more than one property as long as they are worth between £70,000 and £6m. More expensive homes are reviewed on a case-by-case basis, the firm said.

Equity release schemes for landlords have been offered by some lenders in the past but this new range is believed to be the only one currently available.

Retirement Advantage confirmed that tenants would not be forced out of properties early when a property owner dies. The firm has also launched a similar range of plans for people with second homes that are not rented out.