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Big lenders unlikely to be tempted by limited company BTL, says Young

Bob Young Fleet 2014

Although limited company BTL lending is on the increase, its specialist nature makes it unlikely to tempt high-street names

The start of the new tax regime for landlords has coincided neatly with a spate of new data around activity levels and the use of limited company vehicles to purchase and retain investment properties.

A Mortgages for Business survey suggests that 77 per cent of all buy-to-let purchase applications are made via limited company structures, up from 69 per cent at the end of last year. This is perhaps unsurprising given that landlords would be seeking to mitigate the impact of tax relief changes.

However, whether the increase in limited company buy-to-let activity will bring more lenders into this space is a moot point. The same survey suggests that product choice from those currently in the sector has improved already, increasing by more than a third to 266 limited company offerings.

Will those outside it look at such figures and be tempted in? I suspect not – at least in the short term. The bigger, high-street/mainstream buy-to-let players appear focused on individual landlord lending, with no suggestion of an immediate move to change that strategy.

This appears to be acknowledgement of the specialist nature of limited company lending and the requisite processes, underwriting skillset and experience required. It is not simply a case of flicking a switch and being ready to lend in this sector.

With demand for limited company lending likely to grow, advisers should have a fairly solid stable of players to choose from. Product choice is already growing from existing participants and this is having an impact on pricing.

However, it makes sense to be a specialist in this area, which is perhaps the reason why those steeped in individual buy-to-let lending may not have the appetite to move to a limited company offering any time soon.

Bob Young is chief executive officer at Fleet Mortgages

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