Increasing Number of Landlords Applying for Limited Company Mortgages

More than two-thirds of buy-to-let mortgage applications in the fourth quarter (Q4) of 2016 were from investors seeking limited company mortgages, according to Mortgages for Business.

The broker reports that the proportion of applications for limited company mortgages jumped by six percentage points on a quarterly basis, from 63% in Q3 to 69% in Q4.

Increasing Number of Landlords Applying for Limited Company Mortgages

Increasing Number of Landlords Applying for Limited Company Mortgages

This compares to just 21% recorded before the forthcoming changes to tax relief on finance costs were revealed by former chancellor George Osborne in July 2015. Landlords operating under a limited company structure will be exempt from the reduction in how much tax relief investors can claim on finance costs, such as mortgage interest.

However, the broker notes that while there has been a significant rise in the number of applications for limited company mortgages from landlords, the number of lenders catering for this structure has remained flat, at just 14, while the amount of products available has risen from 195 to 198.

The proportion of products on offer to landlords using a limited company as a total of all buy-to-let mortgages available remained at 16%.

The Managing Director of Mortgages for Business, David Whittaker, says: “The sharp increase in purchase applications made by landlords using a limited company structure is unsurprising, given the financial incentive to do so, and it is encouraging to see growing numbers of landlords approaching their investment intelligently.

“With the changes to tax relief set to be phased in from April 2017, this trend is unlikely to be reversed any time soon.”

However, he adds: “Despite the growth in the number of purchase applications made via limited companies, the number of lenders and products catering to this part of the market has remained flat.

“Although many mainstream lenders do not yet have an offering for investors using limited companies, many smaller lenders have significant expertise when it comes to servicing this part of the market.”

If you are considering a limited company structure for your buy-to-let business this year, remember to choose a market leading Landlord Insurance provider to protect your investment. Here at Just Landlords, we offer 33 essential covers as standard to all landlords – can your current provider ensure this much cover? Find out more about our award-winning cover:

©2019 Just Landlords

Log in with your credentials

Forgot your details?