Buy To Let loans to limited companies growing in popularity

There has been a big jump in buy to let (BTL) lending to landlords trading as limited companies, according to a new report.

The Buy To Let Index from Mortgage For Business reveals that lending to limited companies from BTL lenders has risen by 47% over the past year.

This marked uptick in lending is seen as a legacy of changes announced by the UK Government in July 2015, which phased out mortgage tax relief on landlords’ finance costs. As a result, working as a limited company, rather than as an individual, has become an increasingly attractive proposition for landlords.

The figures from Mortgage For Business show that there were 22 BTL lenders offering products for limited companies in Q3 in 2018, compared to 15 a year earlier. Among the new lenders are the West Bromwich Building Society, and Magellan Homeloans.

Over the same period, the number of mortgage products on the market available to limited companies leapt from 263 to 628. Such companies now account for 44% of completed BTL mortgage transactions.

Economic questions behind long term deal popularity

Wider uncertainty in the market is possibly reflected in the fact that 96% of landlords opted for a fixed rate BTL mortgage, with nearly three-quarters of them opting for deals lasting five year.

“It has been encouraging to see so many new entrants to the specialist end of the buy to let market in the last quarter, putting product availability at an all-time high,” said Steve Olejnik, managing director at Mortgages For Business.

“This just goes to show there is still a lucrative, buoyant market out there following on from the recent regulatory changes."

“With the uncertainty surrounding Brexit and the possibility of another Bank Rate rise in the near future, I am not surprised that the majority of landlords are choosing to fix. It will be interesting to see what knock-on effect this will have on the buy to let remortgage market.”


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