The latest Buy-To-Let Index has revealed that in the second quarter of 2017, limited companies borrowed more for buy to let property than individual landlords.
As reported in a July 2017 BridgingAndCommercial.co.uk article, limited companies purchased 73% of buy-to-let properties in the second quarter of 2017. This is up from 62% in the first quarter. Companies represented 78% of loan applications for buy-to-let properties.
Buy-to-let landlords have had cost increases because of cuts in the tax relief on commercial mortgage interest payments, whereas limited companies have more favourable tax rules. The affordability tests lenders apply for limited companies are often not as strict as those for individual landlords, so many landlords are setting up limited companies because of these advantages.
Forming up a limited company and transferring property ownership to the company can be complex and there are costs involved in running such a company. Individual landlords who are considering forming limited companies are advised to seek financial advice before committing themselves.
The Buy-To-Let Index report showed that commercial buy-to-let mortgages are more favourable for property investors. The average three-year and five-year fixed mortgage has fallen by 0.4%. At present, landlords can find three-year fixed rate mortgages at 3.7% and five-year mortgages at 4%.
The report also noted that the number of buy-to-let lenders remains steady at 36.
A mortgage broker has access to a wide range of commercial mortgage lenders for both individual landlords and companies, helping them find the best deals.