According to a recent industry survey, there has been a substantial
increase in lending over the last six months to investors who are purchasing properties
as a company.
The specialist broker, ‘Mortgages for Business’, who
conducted the survey discovered that buy to let mortgage applications completed
by limited companies rose to 30% of all buy to let transactions in the first
half of 2016. This is up from 21% in the second half of 2015 and just 18% in the
first half of 2015 respectively.
The amount of mortgage lenders offering products to limited
company borrowers increased to 14 from 2 six months ago, with total products available
from lenders rising to 154 from 147 over the same period.
There have been varying suggestions, although expressed with
caution, that landlords could incorporate to minimise the effects of recent buy
to let tax changes, especially the new stamp duty levy for second properties
and 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” said David
Whittaker, Managing Director of Mortgages for Business.
The Chancellor has also announced that
he intends to lower corporation tax to 15% following the Brexit result. This
could lead to 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” said Whittaker.
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