There has been a significant rise in the number of buy-to-let landlords utilising limited companies in order to manage their buy-to-let portfolios.
This rise comes as a direct consequence of heightened Government regulation and changes to the tax process, such as the alterations to mortgage interest tax relief calculations, coming into force tomorrow (April 6th).
New data from Mortgage for Business shows that 77% of all buy-to-let purchases in the opening quarter of 2017 were made through corporate vehicles. This was a rise from 69% seen in the final quarter of 2016.
However, it represented a huge rise from the 21% seen prior to the tax relief changes announced by then Chancellor George Osborne in the Summer Budget of 2015.
As a result of more demand, the volume of products available to limited company borrowers has increased by more than a third to hit 266. What’s more, limited company rates are now at record lows.
Many landlords are being left with little choice but to incorporate, following a raft of changes recently, including the 3% additional stamp duty surcharge and tougher mortgage lending criteria. Limited companies do not fall under the same legislation, therefore are not subject to mortgage interest tax relief alterations.
David Whittaker, CEO of Mortgages for Business, observed: ‘With the changing face of the buy-to-let mortgage market, it is no surprise that lenders are keen to appeal to limited company borrowers.’
‘We have been recommending for some time that our clients seeks professional tax advice to determine whether incorporation is the most suitable route for their circumstances and these figures can only further encourage landlords to consider their position,’ Mr Whittaker added.