A market survey by specialist broker Mortgages for Business reveals that there has been a substantial increase in lending in the past six months to buy to let investors who have incorporated.
The broker says transactional data reveals that the number of buy to let mortgage applications completed by limited companies grew to 30 per cent of all buy to let completions in the first half of this year, up from 21 per cent in the second half of 2015 and just 18 per cent in the first half of 2015.
Mortgages for Business also says that the number of lenders offering products to limited company borrowers has also increased to 14 now, from 12 six months ago.
Product numbers increased to an average of 154, up from 147 in the last six months of 2015, although the actual proportion of them as a percentage of the whole BTL market fell due to the increase in product numbers available to individual borrowers.
There have been various suggestions – many with varying degrees of caution – that landlords could incorporate to minimise the impact of recent buy to let tax changes, especially the phasing out of individual landlords’ mortgage interest tax relief.
“Applications and completions for limited company borrowers appear to have stabilised at around one third of all buy to let business. However, this masks a dramatic change in the investment pattern for new purchases where the proportion investing through limited companies has risen from less than 20 per cent by number – or 25 per cent by value – in the first half of 2015 to over 50 per cent in 2016” says David Whittaker, managing director of Mortgages for Business.
With the Chancellor announcing his intentions to lower corporation tax to 15 per cent following the Brexit result, Mortgages for Business says there may be even more landlords incorporating shortly.
“Clearly, the trend for limited company buy to let represents a real step change in behaviour as landlords adapt their investment strategies to mitigate the increased costs brought about by recent changes in the tax regime” says Whittaker.