Number of Landlords using Limited Companies on the up

The number of landlords using limited companies to manage their buy-to-let portfolios is on the up, in the face of greater Government regulation, according to new figures.

Fresh data from Mortgages for Business shows that 77% of all buy-to-let purchase applications were made via a limited company in the first three months of this year, up from 69% in the final quarter of 2016, and just 21% prior to the mortgage interest tax relief changes being announced in the Summer Budget 2015.

REMEMBER – The amount of mortgage interest and other finance costs that landlords can offset against tax will be gradually reduced from tomorrow (Thursday 6^th April): /government-guide-tax-relief-changes-residential-landlords/

In response to greater demand, the volume of mortgage products available to limited company borrowers has risen by more than a third, to 266, with limited company rates now at a record low.

From a landlord’s perspective, it has been a difficult year following various new measures, including higher Stamp Duty, tougher lending criteria, and the phasing out of mortgage interest tax relief, leaving many investors with little alternative but to incorporate, to maintain investment levels in the private rental sector.

Limited companies will be exempt from tomorrow’s changes to mortgage interest tax relief.

The CEO of Mortgages for Business, David Whittaker, says: “With the changing face of the buy-to-let mortgage market, it is no surprise that lenders are keen to appeal to limited company borrowers.

“We have been recommending for some time that our clients seek professional tax advice to determine whether incorporation is the most suitable route for their circumstances, and these figures can only further encourage landlords to consider their position.”

Landlords, have you taken any steps, such as setting up limited companies, to prepare for tomorrow’s tax changes? If you have not yet considered how the changes will affect you, it is wise to seek financial advice.