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BTLForum17: Landlords must be educated on limited company buy to let

  • 22/03/2017
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BTLForum17: Landlords must be educated on limited company buy to let
Landlords are still failing to recognise the benefits of incorporating their property purchases to shelter their income from punitive buy-to-let tax measures to be implemented from 1 April.

David Whittaker (pictured), managing director of Mortgages for Business, said feedback from property investor roadshows he had attended over the last six months had revealed little interest from landlords in using limited companies to purchase their buy to lets.

Speaking at The Buy to Let Market Forum in Bolton today Whittaker said: “More education is needed to show landlords the benefits of using a limited company.”

Kent Reliance, part of OneSavings Bank, saw its limited company lending rise from 40% of its buy to let gross advances in 2015, to 57% last year which suggested the message that limited companies can be more tax efficient was beginning to spread.

Whittaker said Kent Reliance was fast becoming one of the main go-to buy-to-lenders for professional landlords in the UK. “After Paragon, Kent Reliance will soon become the inheritors of the earth,” he joked with brokers at the Bolton leg of the roadshow.

Expanding the pool of lenders offering buy-to-let mortgages through limited companies is one way of increasing awareness of the products, but currently the market still remains tiny compared to the market for personal buy-to-let mortgages. Mortgages for Business research found that out of 37 lenders offering buy-to-let finance, only 15 did so through limited companies.

Brokers discussed the issue of a lack of limited company lenders in a podcast debate with Andrew Montlake, brand director of Coreco. London Money director Martin Stewart said buy-to-let giants TMW or BM Solutions needed to begin offering limited company products to give the market the boost it needed and to help it become more mainstream.

Talking to Mortgage Solutions after the conference, Whittaker said he agreed that either TMW or BM Solutions needed to show an interest in special purpose vehicle lending.

“As we can see from the results of Kent Reliance, specialist lenders are doing lots of limited company lending, but they are under service pressure. This leads us to the necessity that one of the two big players must come to the limited company party and be part of it.”

But Whittaker said both lenders would face systems and skills challenges in doing so.

“It would be great to see them come to market by October but I don’t think that will happen. They are more likely to be focussing on their portfolio underwriting rules which need to be in place before the end of September,” he added.

Phil Rickards, BM Solutions head, said: “We are considering a number of options in the light of multiple changes affecting the buy-to-let market, including limited company. Our immediate priority is to consider how we assess the portfolio underwriting requirements.”

A spokesperson from Nationwide said: “In terms of launching into limited company buy to let, we regularly review the market but have no current plans to do so.”

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