Limited Company buy-to-Let mortgage choices are growing

Competition has intensified in the Limited Company (LC) buy-to-let mortgage market as providers see this as an area of growth for 2017 and beyond. More products as well as cheaper charges and fees are now common place and this has to be good news for the landlord.

The choice now of (LC) buy-to-let mortgage products is at the highest it has ever been since records started. We are also finding new lenders are joining this growing market every day.

The lowest interest rate mortgages and lowest fees are reserved for low loan to value ratios. So the larger the deposit the better the deal, but there are still some very good deals available for the clients with smaller deposits.

Fixing the rate now could be cheaper than betting against rate rises?

Incorporating to benefit landlords

The tax changes impacting the buy-to-let market have certainly taken their toll on landlords, many of whom could be finding their profitability seriously compromised. As a result, many are turning to limited company arrangements to avoid being hit with additional tax, but could this be an option for you, and how can you go about it?

a) Register as a limited company with Companies House. This, in a nutshell, is incorporating. You can do this yourself online, or you may want to go through a solicitor or accountant.

b) You'll need to provide a few basic details, such as your company name, address, the director, details of the company's shares/shareholders and what it does (this will require you to check your SIC code, or standard industrial classification of economic activities)

On the increase

Buy-to-let fixed rates rose in April for the first time since January, marking the end of a period of reductions.

Rates rose in April across 2,3 & 5 year terms, according to the latest edition of the Buy to Let Mortgage Product Index.

The increases mark an almost complete reversal of the falls witnessed in March, with only five-year fixed rates failing to return to their February averages, remaining 0.01 percentage point lower at 3.76 per cent.

For some time now buy-to-let mortgage lenders have been cutting rates to maintain lending volume in a sector that has been actively targeted by both the taxman and the regulator. Rates can only fall so far and figures from April suggest we may have reached the limit.

Yields remain strong

The latest statistics for 2017 show average house price and median rents have remained strong despite a dip in rents across the UK.

Meanwhile, house price growth has slowed, but prices remain fundamentally strong. Swansea saw the biggest increase in average property prices, of £6000 followed by Milton Keynes with an increase of £4,700. Although the South of England continues to see stronger house price growth than the North, the gap between the north and south is shortening.

The UK’s Northern Powerhouse has proven best for investment in buy-to-let property. Yields of over 7% can be achieved in Salford, while Leeds and Manchester offer returns of 5.6% and 5.5% respectively. London sits amongst the bottom of the rankings; properties here provide returns of just 3.5%. Chelmsford in Essex provides the weakest returns of just 2.9%.