Ltd 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%.