Landlords are becoming more aware of how tax changes will affect their properties under individual names says Phil Riches, head of sales at Keystone Property Finance.
At this year’s MBE Bristol, Riches claims that more landlords are having properties under limited companies as the understanding of regulatory changes gets underway.
Limited company activity since 2015 has increased across pipeline, offered and completed deals by as much 52% according to research by Keystone and Mortgages for Business.
After showing the statistics, Riches questioned in his presentation the Bank of England’s decision to only start collecting limited company data from lenders from Q3 2017 considering the increases the market is currently seeing.
The pros of a limited company according to Riches include the fact that interest relief remains a fully allowable expense, and how limited companies are not subject to the new ICR and stress test changes meaning landlords are able to borrow more.
The only downside Riches mentioned was how exit strategies may be more expensive than Capital Gains Tax (CGT).
Thanks to the positives of a limited company, Riches outlined the increases seen in firms offering limited company funding this year. The number continues to rise from the 15 recorded in April 2017; a considerable increase from the six that offered this type of funding in 2014.
The predictions in buy-to-let currently stand at £38bn in 2017 and £33bn in 2018 according to Riches.
In terms of predictions for limited company buy-to-let completions, Riches claimed statistics stand at 3.5 billion limited company buy-to-let completions by the end of this year and 6 billion completions next year.