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Buy-to-let market adapts to changes

This article is part of
Guide to buy-to-let and taxation

Mark Harris, chief executive of mortgage broker SPF Private Clients, believes this alone means far more buy-to-let purchases will be made through limited companies.

He says: “Arguably the changes in mortgage interest tax relief were always the biggest hardship for landlords so moving an existing portfolio into a company still makes sense for many investors as corporate entities can offset mortgage interest against their tax bill as a business expense.”

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Mr Travis agrees: “It may prove to be a loophole that is quickly plugged, but as it stands, [limited] companies can still get mortgage interest relief at the marginal rate, which may be higher than the basic rate of 20 per cent.”

Flexibility

Meanwhile, many providers have been focusing on ways to give more flexibility to potential landlords.

Mr Travis says: “Given the coverage generated by the idea of SPVs, those willing to lend to SPVs should see a surge in demand soon enough.

“This will doubtless precipitate a proportionate increase in capacity. It should see the introduction of more flexible products, with lenders willing to increase LTVs even further, and the promise of more competitive rates hitting the market.”