Limited companies surpass landlord borrowing for the first time

Posted on Monday, July 10, 2017

New data from Mortgages for Business has revealed that buy to let lending to limited companies hit a record 51% by volume during Q2 surpassing individual landlords for the first time.

The research shows that of buy to let purchase completions in Q2, 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.

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% 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%

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."

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