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TODAY'S OTHER NEWS

Surge in limited company buy-to-let loans

The number of investors purchasing buy-to-let properties through a limited company rose sharply in the final quarter of 2015, new figures show.

Nearly two out of five of all new buy-to-let applications came from limited companies, according to new figures from Mortgages for Business.

And a quarter of all buy-to-let completions were for limited company borrowers.

Mortgage choice is also growing with 30% of buy-to-let lenders now offering a limited company mortgage. Deals are getting cheaper, with average pricing falling to 4.4%.

The H2 2015 Limited Company Buy to Let Index shows new applications for limited company buy-to-let mortgages dipped to 15% of all applications in October.

Then they immediately started to rise, spurred on by Chancellor George Osborne's stamp duty surcharge announcement.

By December, new limited company applications accounted for just over 38% of all buy-to-let applications, marking a “step change” in investor behaviour.

David Whittaker, managing director at Mortgages for Business said: “The increase in limited company activity is to be expected given the proposed restrictions to buy-to-let mortgage interest relief for individuals.

“Operating portfolios via corporate structures is expected to be more tax efficient, particularly for higher tax rate-paying individuals.”

Whittaker said the stamp duty surcharge has also had a direct impact on activity with investors rushing to complete purchases completed before 31 March 2016.

He welcomed the rise in the number of limited company buy-to-let mortgages hitting the market. 

“It’s also interesting that pricing has come down, if only marginally. I wouldn’t be at all surprised if rates for limited companies reduced further in the coming months but I doubt we’ll see huge falls.”

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