Limited company applications accounted for 38% of the buy-to-let market in December, Mortgages for Business data has revealed.
Limited company applications accounted for 38% of the buy-to-let market in December, Mortgages for Business data has revealed.
This represents a rise from 15% in October, while completions also rose from 17% in September to 24% in December.
The results are hardly surprising, as buy-to-let landlords applying through limited companies will be able to avoid the government’s upcoming tax changes.
From 2017 to 2020 the amount of buy-to-let tax relief residential landlords can claim back will be cut from 45% to 20% for top rate taxpayers.
David Whittaker, managing director of Mortgages for Business, said: “The increase in limited company buy-to-let activity is to be expected since the proposed restrictions to buy to let mortgage interest relief for individuals paying the higher tax rate were announced by the government in the Summer Budget.
“The stamp duty surcharge has also had a direct impact on activity with investors trying to get purchases completed before 31 March 2016, particularly as the actual rules where the surcharge will apply will not be confirmed until 16March 2016.”
The number of limited company buy-to-let products have increased by nearly 50% from 99 in quarter one 2015 to 147 in quarter two.
Prices have also come down, as the typical limited company rate has fallen from 5.4% in July to 4.4% in December.
Whittaker added: “It’s good to see that the results continue to disprove the theory that there are insufficient products available to limited companies.
“It’s also interesting that pricing has come down, if only marginally. I wouldn’t be at all surprised if rates for limited companies reduced further in the coming months but I doubt we’ll see huge falls.”
