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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 names.
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.
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