According to the Buy to Let Club, Buy to let landlords
are increasingly taking out mortgage applications via limited companies. A
suggestion previously by a number of experts in the industry was to set up
limited companies as a way of combating the new tax regulations. It appears
some landlords have done just that.
This research is supported by other findings that have
outlined similar patterns in the buy to let market. Landlords are looking for
ways to combat the recent stamp duty surcharge and reduce their tax liability.
Managing Direct of Buy to Let Club, Ying Tan, said: ‘It’s
interesting to see that recent data from our B2B arm, Buy to Let Club, does
indeed show a significant increase in applications via limited companies. It
seems that the early predictions were justified – an increasing number of
landlords appear to be adopting this model in order to protect themselves from
the reduction in tax relief coming into effect from next year.’
Lenders are reacting quickly to the growing trend of
landlords setting up limited companies, with their rates falling as competition
amongst lenders heats up. Alan Cleary, managing director at Precise Mortgages,
commented: ‘…this type of product is growing in popularity and I expect it to
be a popular choice amongst brokers and landlords.”
Precise Mortgages has responded to the changes in the
market by launching an exclusive limited company buy-to-let three-year fixed
rate mortgage through Buy to Let Club.
Only time will tell how popular limited companies become
but it will be intriguing to see if the trend continues to grow and what the
effect/s will be.
At Orchard & Shipman we work with highly experienced
financial services partners to offer our landlords the best value and quality
financial products on the market including mortgages, buildings and personal
insurance. If you wish to take advantage of the great mortgage deals currently
on offer or if you want to find out how we could assist you with your financial
needs, then visit
http://www.orchard-shipmancorporate.com/services/financial-services/ or contact
Orchard & Shipman today.
According to new data from
Equifax Touchstone, July’s buy to let mortgage lending has fallen 39% in
comparison to the same month a year ago.
Additionally, the average
value for buy to let mortgages is down year-on-year, having fallen from £160,203
to £157,195.
We have been saying that
the stamp duty surcharge introduced in April would impact the housing market
and these statistics suggest that is the case.
The impact of Brexit also
has to be factored in. July – the first full month after the Brexit vote – buy
to let mortgage sales were down 15.2%. That is in comparison to the June total
which lead up to the referendum.
It is common knowledge
that with Brexit and the numerous changes to the buy to let market implemented
by the government that now is a turbulent time. But that is not the say that the
market can’t be profitable or a good investment. The key is identifying rental
hotspots and ensuring your property is up to the required standard. There are
still huge opportunities in the market as tenant demand continues to rise and
with insufficient numbers of new houses being built, this will continue to be
the case.
What’s more, lenders are
cutting their mortgage rates to entice investors as they realise the effect the
stamp duty surcharge is having on the market.
It is still early doors
and we don’t know the full effect/impact the stamp duty surcharge and Brexit
will have on the buy to let market. Traditionally, there is a dip in mortgage
sale volumes during the summer months of July and August. So it will be a few
more months before the full effect can be identified.
At Orchard & Shipman
we are more than happy to provide advice, support and guidance on any of the
challenges facing landlords today. You can speak to one of our experts by
calling 0203 301 5993 (England) 0131 516 9799 (Edinburgh) & 0141 428 3263
(Glasgow). Alternatively, you can visit our website to find out more about how
we can help you; www.orchard-shipman.com.
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