Swing towards Limited Company deals

The proportion of buy-to-let deals available to limited companies has doubled in just one year as the market responds to the government’s tax changes.

One year ago, limited company products made up just 9% of the buy-to-let market, but the figure is now more than 20%, according to research.

Limited companies were not affected by the changes to mortgage interest tax relief that were announced by George Osborne in 2015 and introduced on 6 April this year.

The changes mean mortgage interest tax relief will gradually be cut back to 20 per cent between 2017 and 2020, making a significant dent in landlords’ returns.

Despite the boost in product numbers, borrowers considering this type of mortgage should be aware that they could find themselves on a more expensive deal compared to the rest of the BTL market.

The average two-year fixed rate BTL mortgage for those applying as a limited company stands at 4.2% today, whereas the average two-year fixed rate for the rest of the market is less at 3%. With all the extra legwork a limited company option entails, any borrowers considering it should consult a financial adviser to ensure it is the right route for them.

If you would like to know more about limited company mortgages please do get in touch and one of our qualified advisers will be happy to assist.