Buy-to-let incorporation

The majority of the buy to let purchase transactions made through limited companies last year were related to additional property acquisitions, although the figures also include landlords selling property they already own personally into a corporate structure.

All transfers of properties from individuals to limited companies must be treated as a new purchase, and therefore do not qualify as a re-mortgage.

Throughout 2017, the interest in landlords using corporate structures from which to operate their portfolios has continued to grow rapidly and this is continuing into 2018.

This change in behaviour was triggered back in 2015 when incremental reductions to higher income tax rate relief on buy to let mortgage interest and other finance costs were announced by former Chancellor George Osborne. Since then, stricter affordability guidelines imposed by the Prudential Regulation Authority on personal buy to let borrowing has compounded the shift by landlords towards incorporation.

As this area of buy-to-lets mortgages grow so has the choices to the borrower. Mortgage providers haven’t been slow to increase the number of fixed and tracker deals. Also, the charges and interest rates have reduced as popularity has increased which goes to prove lenders are in fierce competition to secure new business.

Landlords will know only to well how difficult it is selecting the correct mortgage deal due to the vast numbers available. The last 3 years has seen a massive shift towards landlords using a professional broker to secure the correct mortgage for their needs. This trend is continuing into 2018 with broker related deals increasing year on year by 24.6%.

If you are looking for a new or re-mortgage, please do make contact and one of our qualified advisers will be happy to help.