Massive increase in Buy to Let through Limited Companies

Massive increase in Buy to Let through Limited Companies

11:20 AM, 8th July 2016, About 7 years ago 6

Text Size

With the impending new tax rules coming into force next year restricting mortgage interest tax relief for landlords with properties in their personal names there has unsurprisingly been a massive percentage increase in Buy to Let mortgages taken out in limited company company

Figures from Mortgages for Business show that their market share of Buy to Let in company names has risen from 18% in the first six months of 2015, to 21% in the second half of 2015 and now up to nearly a third with 30% of all Buy to Let mortgage completions being for companies in 2016.

MD of Mortgages for Business, David Whittaker, talking of this increase said, “this masks a dramatic change in the investment pattern for new purchases, where the proportion investing through limited companies has risen from less than 20% by number and 25% by value in the first half of 2015 to over 50% in 2016, with second quarter applications by limited companies running at over 60% of total applications related to purchases of buy to let properties.”

There has only been a small increase in remortgages for limited companies as it will take a while for these to filter through after initial discounted periods. However, with the possibility of corporation tax reducing to 15% the market share of company over personal Buy to Let is only set to rise further for new purchases.

The percentage of Buy to Let products available to limited companies has risen this year from 13% of all products available to currently 16% with an average of 154 company products available in total. Whilst the number of products has increased the number of lenders willing to consider company applications has remained stable at 14 in total.

As the Market adjust to the new tax regime and the vast majority of new Buy to Let switches to limited companies how long do you think it will be before the government realise all they have done is penalise existing landlords and tenants trapped with the tax changes and just moved new business into the corporate tax environment.

If you need assistance with any type of property finance please complete the form below and we will be happy to help.

Form to Contact Property118

  • Please give us a few details so we can investigate and call you back

Share This Article



15:20 PM, 8th July 2016, About 7 years ago

Unfortunately I suspect a tax-raising Chancellor will be looking at an open goal here. Property Investment limited companies are already taxed differently from companies that are also involved in property but do building work, development, maintenance etc. If lots of private BTL investors start setting up BTL limited companies to reduce their tax bill, all the Chancellor has to do is change the tax regime for small property investment companies (different classes of corporation tax, anyone?) and these investors’ cunning plans could be scuppered.

Alison King

16:18 PM, 8th July 2016, About 7 years ago

I'm finding the whole thing a total dilemma at the moment. I'm in the middle of buying my fifth property and have until Monday to make up my mind whether to buy as a company or not. I have always liked the idea of having my own business and up-professionalizing would allow me to consider extending my activity from the simple model that I currently operate. There's also the option to get other family members involved in the business too.
But the fees are pretty excruciating and I have other options such as sharing some or all of my portfolio with my husband or simply retiring. Then there is the risk of having to use a different conveyancer from the one I like and trust and a mortgage company that has only recently extended their business into my type of property and is going to require all sorts of additional paperwork. It's a puzzle.

NW Landlord

10:10 AM, 9th July 2016, About 7 years ago

Hi Alison

It is a no brainier to be honest in the current climate who knows what's going to happen but I have been investing for 15 years and have a fair sized portfolio that I have just incorporated

I have started buying again now and have set up limited company to do this. If you buy in your own name by 2020 u will be basically working for nothing handing over all your rent to Osbourne


18:07 PM, 9th July 2016, About 7 years ago

Reply to the comment left by "NW Landlord" at "09/07/2016 - 10:10":

But realistically, how long before George Osborne gets his greedy hands on BTL limited companies?

He can argue simply that it is to "level the playing field".

Luke P

13:42 PM, 12th July 2016, About 7 years ago

Reply to the comment left by "H B" at "09/07/2016 - 18:07":

Precisely my argument when I was met with apathy from another local landlord I was trying to encourage into supporting Axe the Tenant Tax campaign...he's a limited company and basically said it doesn't affect him, finishing off by saying he'll just buy up all the cheap property you sole traders try to off-load in the future!

I am both a sole trader and a limited company, but whether I was just one or the other would still support the rolling back of this legislative change. It's us today, but it could be anyone tomorrow if GO uses similar logic.

Sumit Agarwal

15:11 PM, 13th July 2016, About 7 years ago

it’s hard to predict what changes George Osborne would bring in next for taxing BTL companies. But at this point in time opening a limited company seems the right option for a higher rate tax payer. My approach has always been to tackle current problems rather than worry about the future which not under our control. It’s a further relief that corporate landlords are being supported by banks and other lenders in these turbulent times.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now