New research shows that for the first time, landlords who have a limited company for their buy to let business are borrowing more than those who do not.
The figures from the latest limited company buy to let index from Mortgages for Business reveals that:
- over half the value of buy to let (BTL) lending in the second quarter of 2017 was provided to limited companies;
- during the quarter, overall, limited companies borrowed more per quarter than individual landlords, including both purchase and remortgage transactions;
- 73% of BTL purchase completions were by limited companies (an increase of 11% from the first quarter of the year).
- limited companies accounted for 76% of BTL lending by volume, up from 63% in the previous quarter.
The study also shows pricing improvements, with the average three and five year fixed rates for buy to let products available to limited companies falling by 0.4% each to 3.7% and 4.0% respectively as BTL lenders seek to compete in the limited company space.
This further narrows the gap with the wider market, with the average three year fixed rate across all BTL products just 0.2% lower at 3.5%
A spokesman from Mortgages for Business said: “Landlords are increasingly looking to limited company structures because of the benefits they bring in the form of tax efficiencies and softer affordability testing. The structures are not without their hurdles, however, and we recommend all our clients take professional tax advice before deciding how to proceed”.
