As landlords move their portfolios to a company structure, buy to let company mortgages have more than doubled over the past two years.
Despite the trend in the buy-to-let sector for landlords to move into operating their buy-to-let (BTL) business as a limited company, lenders have been slow to respond. However, this could be changing as Hinckley and Rugby Building Society launch their own BTL limited company proposition.
According to Hinckley & Rugby’s head of sales and marketing Carolyn Thornley-Yates,
“There is a relative lack of lenders offering mortgages to be held in the name of a limited company, so we look forward to… bringing our competitive products to brokers and their customers.” The mutual lender is offering a two-year discount product at 2.99% and a two-year fixed at 3.30% through distributor 3mc. Both mortgage products are designed for properties held within special purpose vehicle limited companies. The maximum loan to value for both products is 70%, with fees of £1,500, no early repayment charges and a scale valuation fee.
Limited company landlords expected to drive the market
Figures from Shawbrook Bank show that between the first half of 2015 and the same period in 2018, the number of individual landlords completing buy to let mortgages fell by half to just 34% of all BTL mortgage completions. However, significantly in the same time frame, the proportion of limited company BTL mortgages doubled from 32% to 64%.
Shawbrook predicted that the demand for individual investor BTL mortgages would continue to fall in their July assessment of the buy to let market.
This could be considered bad news for lenders, but as individual investor mortgages fall, the industry is expecting to see growth in the area of limited company BTL mortgages as a direct result of the increasing number of landlords moving their property portfolios into a limited company structure.
Until now product options for landlords building a limited company portfolio have been restricted to a handful of specialist lenders.
However, the launch of Hinckley and Rugby Building Society’s new proposition indicates that mortgage providers might be making a move to capitalise on rising demand and borrowers should expect to see their options expand as new lenders enter the market.