Limited Co's borrow more than individual landlords for the first time

Over half the value of buy to let lending in Q2 was provided to limited companies, according to the latest edition of the Limited Company Buy to Let Index. Based on lending transactions brokered by Mortgages for Business, data from Q2 shows that limited companies borrowed more per quarter than individual landlords for the first time, including both purchase and remortgage transactions.

Limited company structures are particularly common when making new purchases, and Q2 proved no exception. Of buy to let purchase completions this quarter, 73% were performed by limited companies, up more than 10% from 62% in Q1. Similarly, limited companies accounted for 76% of buy to let lending by volume, up from 63% in Q1. This has been caused by high volumes of purchase applications from limited companies, making up 77% of buy to let purchase applications in Q1 and 78% in Q2.

Commenting on the results, Steve Olejnik, COO of Mortgages for Business said:
“Landlords are increasingly looking to limited company structures because of the benefits they bring in the form of tax efficiencies and softer affordability testing. The structures are not without their hurdles, however, and we recommend all our clients take professional tax advice before deciding how to proceed.”

The index also shows pricing improvements, particularly three and five-year fixed rates, as buy to let lenders seek to compete in the ever-increasing limited company space. Among buy to let products available to limited companies, the average three and five-year fixed rates fell by 0.4% each to 3.7% and 4.0% respectively. This further narrows the gap with the wider market, with the average three-year fixed rate across all buy to let products just 0.2% lower at 3.5%

The index can be found here.

 

You may also be interested in:

Setting up an SPV Limited Company
Buy to let lenders which offer mortgages to limited companies usually require the limited company to be an SPV (Special Purpose Vehicle). Jeni explains what one is and how to get one.
Read

Stamp Duty FAQs
Simon Whittaker answers the most commonly asked questions around SDLT - including information on mixed use properties and non-residential Stamp Duty rates.
Read

Common areas of concern when borrowing via a limited company for buy to let
Many landlords are now becoming more comfortable with buy to let borrowing via a limited company including the few additional hurdles this brings. However there is still a perception that the process is complicated and harder to get agreed but this is not always the case.
Read 

FAQs on Ltd Co borrowing for buy to let
Frequently asked questions on limited company borrowing for buy to let mortgages.
Read

4th July 2017