Limited Company Products Now Offered by Most Buy to Let Lenders

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Most buy to let investment property lenders are now offering limited company products to investors.

It is the first time that most lenders are offering such products, with 59 per cent now offering limited company mortgages for the buy to let property sector.

The figures for the second quarter of 2019 in the Buy to Let Mortgage Index published by Mortgages for Business have shown that the rise in limited company mortgages to include most lenders has been growing steadily since the tapered introduction of new tax rules for landlords began two years ago.

The restriction of income tax relief on mortgage interest has meant that limited companies can be a more tax and financially efficient method of operating property portfolios than the self-employed route which was used predominately by landlords in the past.

The value of limited company products has also been rising, now accounting for more than half (52 per cent) of the total value of buy to let mortgage applications er the quarter.

The pricing gap between standard buy to let mortgage rates and limited company rates is also falling, down by two points from the first quarter to a 0.6 per cent differential as most lenders fight for the limited company mortgage share.

There was also an increase in the proportion of fee-free and flat fee-based products, up to 20 per cent and 38 per cent respectively, to the detriment of percentage-based fees which fell to 40 per cent despite having peaked at 48 per cent at the end of 2018.

Flat lender arrangement fees also fell for most lenders on a quarterly basis, now sitting at £1,504 in a boost for landlords needing finance.

Managing director of Mortgages for Business, Steve Olejnik, commented: ‘The Index points to some good news for landlords, particularly those using limited companies who now have a greater choice of lenders than ever before, to help them finance their rental properties and access to better rates.’

He continued: ‘In particular, we’ve seen the options increase at the more specialist end of the market, and we’re delighted that the number of lenders in that space is growing.’

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