More and more Landlords are switching

There is yet more evidence that an increasing number of buy to let investors are setting up limited companies to offset the worst impact of changes to mortgage interest tax relief.

The latest Mortgages for Business “Limited Company Buy to Let Index” reveals there was a surge in the proportion of applications for buy to let properties made by landlords using limited companies at the end of 2020.

Over the past 18 months, landlords’ behaviour has changed as the sector comes to terms with the new tax regime. The increased use of Limited Company structures includes both new purchases and transfers - that is, purchases made by landlords selling their personally owned property to their limited company.

The proportion of re-mortgage applications made via Limited Company structures also increased substantially of the last 12 months and figures show this trend is continuing into 2021. This is a sign that greater numbers of investors are choosing to transfer their properties into limited company names, effectively reducing the proportion of re-mortgaging applications made by individuals.

The sharp increase in purchase applications made by landlords using a limited company structure is unsurprising given the financial incentive to do so, and it is encouraging to see growing numbers of landlords approaching their investments intelligently.

With the changes to tax relief from April 2017 this trend is unlikely to be reversed any time soon. As a landlord, it is most certainly worthwhile finding out whether incorporating could assist your business.

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