Release cash from your buy-to-lets with new ‘equity release’ loan

Squeezed buy-to-let investors will soon be able to release cash from any of their rented properties without having to sell. Retirement Advantage, a pensions company, has launched a range of equity release options aimed at landlords.

Currently, property owners can take out equity release plans, sometimes known as “lifetime mortgages”, only on their own residence.

Equity release schemes, which allow cash to be released from properties that 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, predicted this 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 three 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 the 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.

Its managing director, Tom Evans, said: “With demand increasing, innovation of this kind is integral to meeting the needs of people across the country.

“These new products will allow owners of buy-to-let properties greater ability to make the most of their property wealth to live the retirement they want.”