Buy-to-let (BTL) borrowing through a limited company has surpassed individual BTL borrowing for the first time, a new study has revealed.
The research comes as hordes of landlords attempt to manoeuvre recent tax changes.
In April, the Government introduced an additional three per cent rate of Stamp Duty Land Tax (SDLT) on all second home owners, potentially raising the total purchase value sum by tens of thousands.
Additionally, the rate of mortgage interest relief offered to landlords will be reduced over the next four years. The measure will add a huge tax burden for landlords currently paying the basic and higher rate of tax.
It’s no surprise then that more than half (51 per cent) the value of BTL lending in the second quarter of the year (April to June) was provided to limited companies.
According to Mortgages for Business, which published the report, 73 per cent of purchases were actioned by limited companies, up 10 per cent compared to the first quarter (January to March) of this year.
Limited company share of lending by volume also jumped, from 63 per cent to 72 per cent.
The buy-to-let mortgage market has also acted on recent changes to taxation, with the average interest rate dropping 0.4 per cent in an attempt to lure potential bidders.
Steve Olejnik, chief operating officer 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.”
At RDP Newmans, we help both portfolio landlords and prospective investors find the best possible tax solution. For a free, no-obligation consultation, contact us today.