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Limited company BTL market dominated by purchases, index finds

Nearly three-quarters of limited company buy-to-let mortgage transactions were used to buy property rather than refinance in Q4 2017, according to figures published by Mortgages for Business.

The ‘Limited Company Buy-to-Let Index’ found that 72 per cent of all transactions in this area were for property purchase, contradicting the individual landlord and wider residential mortgage market where refinancing has been exceeding purchases.

The report states that the number of landlords using corporate structures to operate their portfolios is growing rapidly, triggered when incremental reductions to higher income tax rate relief on BTL mortgage interest and other finance costs were announced by former Chancellor George Osborne in July 2015.

Prudential Regulation Authority affordability guidelines have also compounded the shift by landlords towards incorporation, it says.

Mortgage for Business chief operating officer Steve Olejnik says:  “To help landlords determine whether using limited companies is the right strategy for them, we’ve been encouraging our clients to take professional advice. We will also continue to produce guides and webinars which explain how the tax and regulatory changes might impact their investments. The landscape of buy to let is changing and it’s important that landlords are equipped to traverse the terrain.”

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Buy-to-let to keep shifting towards limited company lenders

The buy-to-let market will increasingly shift away from larger lenders towards smaller players that offer limited company options as the reality of tax changes introduced last week starts to bite, experts say. Last week saw the beginning of a gradual phasing-out of landlords’ ability to offset mortgage interest against tax, which will see interest relief […]

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