Research from SimplyBiz Mortgages has showed that more traditional buy-to-let lending could be set to fall this year.
Martin Reynolds, chief executive of SimplyBiz Mortgages (pictured), said: “Information received directly from the firms we serve is absolutely invaluable in terms of letting us see trends in the direction of the market, and giving us insight into the reasons why we might see changes from not only brokers but also consumers.
“Changes in the 2015 Autumn Statement clearly made the market less attractive to most portfolio landlords in terms of stamp duty and certain aspects of taxation, and we expected to see a rise in the number of limited company buy-to-let cases as a result.
“However, the fact that the majority of brokers expect to see this rise continue throughout 2018 gives us an indication that increasing numbers of landlord clients are selecting limited company BTL.
“I would, however, add the cautionary note that the taxation issues surrounding this type of business are complex, and it can’t immediately be assumed that limited company BTL will be the most tax efficient route for all clients.
“As the majority of brokers writing the business are not tax specialists, I would advise them to guide their clients to get a qualified opinion to ascertain the best long-term option for an individual client’s circumstances and financial plan.”
Mortgage adviser at Capricorn Financial Consultancy, Alexander Smith, told Mortgage Solutions: “I think people with, or aspiring to have, a large portfolio of property will naturally gravitate towards a Ltd company structure and the research broadly followed what we have seen over the past 12 – 18 months.
“For the smaller landlord personal ownership of the asset is often more cost effective but activity in this sector has declined over the same period due to higher entry costs, not only with regards to the additional 3% stamp duty, but also due to the higher stress rates employed by lenders, which make borrowing above 60% a struggle unless you’re able to include sufficient personal income.”