Better that new lenders get their limited company offering right in six months’ time than join too quickly and get it wrong
March was very busy for our sector as we raced to get deals over the line before the introduction of the 3 per cent stamp duty surcharge. We are now near the end of April and, while not quite so frantically busy, both landlords and lenders are still pleasingly active, even if some solicitors seem to have gone Awol.
We continue to see an uptick in landlords switching to corporate vehicles, principally SPVs. Our transactional data shows that, by case count, 41 per cent of buy-to-let applications in Q1 comprised limited companies, up from just 18 per cent last year. Completions for limited companies were also high: 39 per cent in March alone.
Lenders, of course, are playing their part. At the end of Q1, of the 33 active buy-to-let lenders we track, 12 were offering between them 153 products for limited companies, out of a total product count of 1,098 (see table above). Bearing in mind this is a snapshot of just a day, I feel it is more than enough for the moment, although I know of three new lenders coming to market in Q2 and Q3 that will have limited company products from the start. It will be interesting to see what they bring to the table.
Using the same snapshot data, products for limited companies are slightly more expensive than those for individual borrowers, due to the increased underwriting involved.
Since my February column, Keystone has joined the likes of Foundation Home Loans, Metro Bank and Paragon Mortgages in offering the same rates to both limited company and individual borrowers. Like them, for now we have chosen to absorb the extra underwriting costs internally.
Lenders without a limited company proposition are coming to market when they can. For some, the ‘lift and shift’ on technology and skills training is a vast exercise.
But I would rather they got it right in six months’ time than came to market too quickly and got it wrong. The market is evolving to meet demand.
David Whittaker is managing director at Mortgages for Business