Limited company buy-to-lets now surpassing individual

Limited company buy-to-let lending is now exceeding lending to individuals for the first time, Mortgages for Business research claims.

Limited company buy-to-lets now surpassing individual

More than half (51%) of buy-to-let lending by volume was to limited companies in the second quarter of 2017.

What is more, nearly three quarters (73%) of buy-to-let purchases were with a limited company in Q2, up from three in five (61%) in Q1.

Steve Olejnik, chief operating officer 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.”

Limited company mortgages are more expensive as Every Investor saw earlier this week. Analysis by Private Finance showed a limited company borrower can expect to pay 3.41% for a 2-year fixed 75% loan-to-value mortgage deal compared to 1.92% for personal borrowers. This is mainly due to fewer lenders offering this type of mortgage.

However, Mortgages for Business says limited company products are getting cheaper. Typical 3 and 5-year rates fell by 0.4% each to 3.7% and 4.0% in the second quarter.

This closes the gap on the wider market where, according to the lender, average three-year fixed rate across all buy-to-let products are 0.2% lower at 3.5%.

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