Limited company lending overtakes landlord borrowing

The most recent data from Mortgages for Business has shown that lending from limited companies surpassed that of landlords for the first time during the second quarter of 2017.

Buy-to-let lending to limited companies hit a record 51% by volume during the three-month period. Of buy-to-let purchase completions in Q2 2017, 73% were performed by limited companies- a rise of more than 10% from the 62% seen in Q1.

Volumes

In addition, limited companies made up 76% of buy-to-let lending by volume, rising from 63% in the previous quarter. This has been caused by a high volume of purchase applications received from limited companies, which made up 77% of total applications in Q1 and 78% in Q2.

What’s more, the index shows pricing improvements, noticeably for three and five-year fixed rates. This underlines the fact that buy-to-let lenders are competing in the growing limited company market.

Limited company lending overtakes landlord borrowing

Limited company lending overtakes landlord borrowing

Amongst these buy-to-let products available to limited company borrowers, the average three and five-year fixed rates slipped by 0.4% each, to 3.7% and 4% respectively.

This has closed the gap with the overall market, with the typical three-year fixed rate for all buy-to-let products only 0.2% lower at 3.5%.

Structures

Steve Olejnik, COO of Mortgages for Business, observed: ‘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 clients take professional tax advice before deciding how to proceed.’[1]

 

 

[1] http://www.propertyreporter.co.uk/landlords/limited-companies-surpass-landlord-borrowing-for-the-first-time.html

 

 

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