Government forcing landlords to house non-paying tenants for lengthy periods11:18 AM, 15th September 2020
About A week ago 40
Mortgages for Business have reported that 78% of all Buy to Let applications are now in the name of limited companies post Section 24 mortgage interest relief reductions coming into force.
73% of all completions including remortgages this quarter were for limited companies up from 62% in the first quarter of this year. Click here to see full Mortgages for Business report.
This shows the massive switch from purchasing in landlords personal names as under section 24 the profit individuals are taxed on does not take into account mortgage interest meaning you can be taxed on a non-existent profit or pushed into a higher tax band with only a 20% basic rate of tax being allowed to be claimed.
However, for a limited company all mortgage interest is deducted from gross profit and taxed only on net.
Steve Olejnik, of Mortgages for Business said, “Landlords are increasingly looking to limited company structures because of the benefits they bring in the form of tax efficiencies and softer affordability testing. The structures are not without their hurdles, however, and we recommend all our clients take professional tax advice before deciding how to proceed.”
“The report also shows pricing improvements, particularly three and five-year fixed rates, as buy to let lenders seek to compete in the ever-increasing limited company space. Among buy to let products available to limited companies, the average three and five-year fixed rates fell by 0.4% each to 3.7% and 4.0% respectively. This further narrows the gap with the wider market, with the average three-year fixed rate across all buy to let products just 0.2% lower at 3.5%.”
Today I launch my comprehensive report: Section 24 of the Finance (No. 2) Act 2015: “the unjust legislation that will make the UK housing crisis much worse.” I would like to thank all of those who have contributed to this report, which I hope will have a significant impact in our campaign to reverse this… Read more
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