Majority of BTL mortgage purchase applications made by ltd companies

Four of every five pounds lent for buy-to-let purchases via Mortgages 4 Business in Q3 were borrowed by a limited company, according to the latest edition of the Limited Company buy-to-let Index.

This represents 79% by value of completing buy-to-let purchases, up from 73% in Q2.

The index also showed mortgage activity by landlords using limited companies remained high generally throughout the quarter, with limited company transactions making up 48% of buy-to-let completions in Q3 by number of mortgages, and 47% by value of lending.

Steve Olejnik, chief operating officer at Mortgages for Business, said: “There was, unsurprisingly, a spike in SPV registrations last year, but it looks like the numbers have been increasing for considerably longer than might be expected.

“Landlords are turning to SPVs because of the benefits they bring in the form of tax efficiencies and softer affordability testing. Switching to corporate structures is not without risk, however, and we recommend all our clients take professional tax and finance advice before deciding how to proceed.”

The index reveals that pricing of buy-to-let mortgages available to limited companies saw a marked contrast between fixed and variable rate products, where fixed rates saw no change in pricing and variable rate products saw decreases between 0.4 – 4.0%.

This comes as statistics by Companies House shows that there was a spike in registrations for Special Purpose Vehicle limited companies in 2016.

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