Landlords are increasingly buying through a limited company, Mortgages for Business’ Limited Company Buy to Let Index has revealed.
The proportion of purchase applications made through a limited company structure jumped by 6% to 69% in Q4 2016 from 63% in Q3.
This is substantially higher than the 21% recorded before the changes to tax relief on mortgage interest were unveiled in July 2015.
David Whittaker, managing director at Mortgages for Business, said: “The sharp increase in purchase applications made by landlords using a limited company structure is unsurprising given the financial incentive to do so.
“With the changes to tax relief set to be phased in from April 2017, this trend is unlikely to be reversed any time soon.”
The increased use of limited company structures includes both new purchases and “transfers”- purchases made by landlords selling their personally owned property to their limited company.
While there has been a significant rise in number of purchase applications made by limited companies, the amount of products and lenders catering for them was unchanged at 14.
Whittaker added: “Many mainstream lenders do not yet have an offering for investors using limited companies whilst many smaller lenders have significant expertise when it comes to servicing this part of the market.”
