Lenders consider offering company buy-to-let deals

Lenders consider offering company buy-to-let deals

Changes to buy-to-let (BTL) taxation are leading some landlords down the limited company route, but only a handful of high street banks have revealed they are currently assessing whether to get involved in this market.

In his Autumn Statement, the Chancellor announced a 3 per cent premium on stamp duty for BTL investors and those buying second homes, aimed at raising £1bn by 2021.

This followed George Osborne’s statement in the summer Budget that the Government will restrict relief on mortgage interest payments for all landlords to the 20 per cent basic rate of income tax, phased in over four years starting from April 2017.

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However, brokers said the moves would just drive some landlords to transfer ownership to corporate structures, which continue to benefit from relief on mortgage interest payments.

A Shawbrook Bank poll of more than 300 brokers last month found 80 per cent expected the stamp duty changes to impair the housing market and the lending environment generally.

Bob Young, chief executive officer of Fleet Mortgages, also suggested the use of limited companies or special purpose vehicles was increasing, particularly among professional portfolio landlords who identified some of the advantages of purchasing and holding property within such a structure.

He cited figures from Mortgages for Business, which showed that at the tail end of 2014 the number of limited company BTL products was 79, a figure which was up to 99 by the end of the first half of 2015.

John Heron, managing director of Paragon Mortgages, said they have provided lending facilities for landlords who choose to hold their properties in a vehicle company for many years.

He said: “We strongly recommend that landlords seek specialist legal, financial and tax advice.”

A spokesman for Metro Bank stated it already did limited company BTL through its commercial team, pointing out that landlords still have to pay the higher stamp duty unless they complete before April.

Yorkshire Building Society Group also responded that they did some fairly small-scale BTL lending to limited companies through the Norwich & Peterborough Building Society commercial mortgages team.

A spokeswoman for the Lloyds Group also said they regularly reviewed the mortgage range and made changes in line with the market and competitors.

Barclays, Nationwide, Natwest, TSB and Leeds Building Society all came back to say they did not offer limited company structures and had no current plans to do so.

Adviser view

Pete Mugleston, director of Online Mortgage Advisor, said his firm had seen a significant increase in enquiries from people looking to purchase a buy-to-let property within a limited company.