More landlords acting as limited companies than not for the first time

by Gary Whittaker

The money borrowed by buy-to-let investors who are operating as limited companies has reached higher than that borrowed by those who are still acting as individuals for the first time ever, new data has shown. 

According to a new limited company buy-to-let index from Mortgages for Business, in the second quarter of this year, more than half of the money borrowed overall by those looking to invest in the private rented sector went to limited companies rather than individuals. 

In that three-month period, the data shows, some 73 per cent of buy-to-let completions in the UK came from landlords who were operating as limited companies. This represents a sizeable increase when compared to the 62 per cent recorded in Quarter One. 

In addition, some 76 per cent of money loaned out to buy-to-let investors went to limited companies in the April to June period, up from just 63 per cent three months before. It shows the way that the buy-to-let market has changed in the very recent past, and how more landlords across the country are now looking to make tax savings by registering themselves as a company. 

Increased Stamp Duty and an inability to deduct mortgage interest from taxable income have both made it more expensive for landlords to operate as individuals in the last couple of years. 

Applications from limited companies were also up markedly in the last two quarters, accounting for 77 and 78 per cent of all mortgage applications respectively. 

"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," said Steve Olejnik, chief operating officer of Mortgages for Business.

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05-July-17General Lettings News