Ltd company buy-to-let on the up

Sarah Davidson

October 23, 2015

Research from Mortgages for Business showed in H1 2015, 23% of buy-to-let lenders offered products to limited companies, up from 21% in the second half of 2014.

Limited company buy-to-let mortgages now account for 12% of all buy-to-let products.

Limited company products cost on average 0.8% more than products for individual investors.

David Whittaker, managing director at Mortgages for Business, said: “As you might expect, pricing is a bit higher than for personal applications because assessing cases requires greater skill and more time.

“Around half of all products for SPVs are available to 75% loan-to-value although you can expect better pricing at the lower LTV points.

“There are a few products at 80% LTV and Kent Reliance offers a couple of products at 85% LTV with rates and fees at the higher end – arrangement fees currently 2.5% of the loan amount.”

Most fees are percentage-based ranging from 0.5% to 2.5%, although occasionally lenders offer deals with no arrangement fees.

When looking at transactions, the index found that, over the last 12 months, the number of buy-to-let mortgage applications made by limited companies accounted for 18% of all buy-to-let cases.

By volume (£m loan amount), limited companies made up 20% of transactions. At face value this might suggest that limited company borrowers are underserved by products but Whittaker said:

“In my opinion, the index reveals a fairly healthy quantity of products and should dispel the commonly held belief that there is a shortage of these types of products.

“As the date for the phased introduction of the tax relief changes draws closer, it will be interesting to see how supply develops over time.”

Loan sizes for applications made by limited companies were typically 10% higher than those made by individual applicants.

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