More limited company lettings

As it stands 18% of properties let out in the first half of 2018 were owned by a company rather than an individual – a record high.

This represents an increase of 4% compared to the first half of 2017 and 8% higher than the first half of 2016.

The number of rented homes owned by company landlords continues to rise. Nearly one in five homes let so far this year were owned by a company landlord, almost double the proportion in 2015, before the tapering of mortgage interest tax relief changes were announced.

Companies are generally taxed more favourably, so in many cases landlords can make cash savings by operating through a company rather than as an individual.

Huge choice

The number of buy-to-let mortgages available for first-time landlords has soared to record levels meaning borrowers can currently benefit from more choice and lower rates.

Figures show the number of deals in this market have increased by 13% since the start of the year despite the major uncertainties caused by regulatory and tax changes in the buy-to-let market.

It means new landlords have the choice of more than 1,200 products and can benefit from an average rate on a two-year fixed-rate first-time deal of around 3%, which is a drop of 0.33% over the last two years.

This is great news that first-time landlords have more choice than ever before, with the number of products available to them in the buy-to-let mortgage market increasing by 339 in just two years.

Providers know all too well that many borrowers on their mortgage books will be coming to the end of their term and reassessing their deal, so they need to attract new business. They’re enhancing their ranges and offering these deals to entice those customers who are new to the market, this will breathe new life into their mortgage books.

Buy to let market seeing good growth

June 2018 saw the buy to let market rise again, applications and completions were up on figures for the same period last year. Investors are without doubt looking to secure new properties whilst mortgage rates are in their favour.

There was also marked increase of new investors into the buy to let market, with the new pension laws now coming into force a new area of investment has opened up. One new investor commented “the returns we have been getting on our cash investments have fallen every year for the last 6 years”. “We have decided to enter the buy-to-let market to help boost our income in retirement”.

Proceed with caution but do get advice

Specialist buy-to-let brokers are urging buy-to-let landlords to tread with caution and seek appropriate advice before jumping into incorporating their property business into a limited company.

The reduction in mortgage interest tax relief and the introduction of stamp duty are two relatively recent initiatives that have resulted in some landlords reassessing their property businesses and deciding to incorporate.

Lenders are predicting there will continue to be a growing trend towards limited company buy-to-let activity this year. But they warn this may not be the best practice for everybody.

It is understandable that buy-to-let landlords want to avoid paying more tax than is necessary, it is essential, as with any investment, that they fully investigate how their personal circumstances apply to buy-to-let taxation.