The range and pricing of buy to let mortgage products for limited companies has never been better according to the results of the Q1 2017 Limited Company Buy to Let Index published by Mortgages for Business. The average number of products available to limited company borrowers increased by more than a third to 266, with fixed rates cut across all terms.
Lenders are offering unprecedented choice to limited company borrowers despite a drop in BTL product numbers overall. Limited company rates have also improved, with the average three-year fixed rate now just 0.5% higher than equivalent products available in the wider market.
This comes in response to ever-growing demand from investors. With limited company borrowers falling outside the scope of both PRA affordability guidelines and changes to income tax relief, phasing in from 6th April this year, investors have increasingly turned to incorporation as a way of sustaining current levels of borrowing. As of Q1 2017, 77% of all BTL purchase applications are being made via a corporate vehicle, another unparalleled high. This compares to 69% of applications in Q4 2016 and just 21% before the 2015 Summer Budget, when the tax relief changes were announced.
Commenting on the results, David Whittaker, CEO of Mortgages for Business said:
“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 seek 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.”
The remortgage market, too, has seen appreciable change this quarter. Remortgaging has, thus far, been largely insulated from the effects of the surge, as landlords seeking to transfer property into their newly formed limited companies must process this as a purchase. However, as we approach the two-year anniversary of the announcement, Mortgages for Business has seen a new wave of completions for limited company remortgages, with limited companies accounting for 30% of remortgage completions in Q1, up from 15% in Q4.
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4th April 2017