The number of landlords choosing to structure their property deals via limited companies is on the rise, as buy-to-let mortgage data reveals these now make up 63 per cent of all purchase applications.
The figure for the third quarter, from Mortgages for Business, is up from just 21 per cent before the changes to tax relief on mortgage interest were announced by George Osborne in July 2015.
This represents a significant change in landlord behaviour and includes both new purchases and “transfers”, i.e. purchases made by landlords selling their personally owned property to their limited company.
The data also shows that 16 per cent of all buy-to-let products are now available to limited company applicants, up from 13 per cent in the first half of the year.
The average rate of a buy-to-let mortgage fell to 3.3 per cent at the end of September, down from 3.7 per cent in June.
Of the products available to limited companies, rates fell to an average of 4.3 per cent. This means that rates available to limited companies are only around one percentage point higher than the average market value.
In contrast, the number of remortgage applications made via a limited company has remained at a fairly similar level and aren’t expected to rise greatly until those who have recently used a corporate vehicle to purchase property are free from early repayment charges.
Mortgages for Business managing director David Whittaker says: “Many lenders with products for both personal borrowers and limited companies, offer the same rates to both.
“At the moment, some of these lenders accept only SPV limited companies, including Foundation Home Loans and Paragon. Some of the more specialist lenders, and I’m thinking primarily of Aldermore Bank, InterBay Commercial, Shawbrook and our own lending band Keystone Property Finance, also offer the same rates to trading limited companies.”