The Manchester-based lender told Specialist Lending Solutions that it was seeing more clients using this facility, especially as more business was being conducted through limited company channels.

“The vast majority of new landlord lending we are seeing is being done in limited company vehicles now,” said Bridging Finance Solutions managing director Steve Barber.

“And we are seeing a significant increase in landlord borrowers turning to bridging for funding due to a lack of capacity in the limited company buy to let market.”

Barber highlighted two main reasons why investors were heading towards bridging finance.

“First, there are not enough lenders and products available yet to service the whole of the market,” he said.

“Second, because of the increased demands in assessing limited company cases it is taking far longer to underwrite deals, sometimes as much as several weeks.

“So landlords or developers are choosing to take out the bridging finance to complete the purchase and then finish the mortgage application in due course.”

Stepping-stone

And he noted that other lender requirements meant bridging was being used as a stepping-stone measure.

“We’re also seeing many limited company lenders are not keen to complete mortgages on properties if they are not income producing at that time, so landlords are also using bridging to cover the time for potentially doing work or getting new tenants in,” he added.

Last month Mortgages for Business revealed the number of fixed rate limited company mortgage products almost tripled within two years to 235 in April.