Majority of brokers expect to write more limited company business in 2022

In a CHL Mortgages poll during a virtual session in conjunction with Knowledge Bank, which had around 100 brokers in attendance, 69 per cent said there were currently writing one to five limited company cases a month.

A quarter said wrote no limited company business at the moment, whilst six per cent said they were writing more than five cases a month.

However, those surveyed said that there were challenges to limited company business. Around six in ten pointed to a lack of knowledge around limited companies and just under half said the structure and shareholding of limited companies was a challenge.

Around 28 per cent said conveyancing was an issue, whilst 20 per cent pointed to securing independent legal advice for shareholders as a potential obstacle.

Using limited companies to purchase buy-to-let (BTL) properties has been growing since tax relief reductions for landlords were introduced in 2016.

According to research from Hamptons earlier this year, between the beginning of 2016 and the end of 2020 there have been more limited companies set up to hold BTL properties than in the previous 50 years combined.

Holding a BTL property in a limited company structure offers tax benefits as you don’t pay income tax on rental income, but rather corporation tax which typically is lower. Borrowers can also deduct certain expenses using a limited company, which you can’t do as a private landlord.

Ross Turrell (pictured), CHL Mortgages’ commercial director, said: “Awareness around the benefits attached to limited company lending has risen greatly in recent times and it’s important for brokers to realise that lenders are always on hand to help them and their clients overcome a host of challenges and provide solutions to meet this growing demand.

“In addition, it could be beneficial for intermediaries to connect with accountants/tax advisers and solicitors as they can offer real expertise on things such as limited company set ups, tax positions and property structures, particularly regarding leasehold issues.”

Turrell said that it was seeing “heightened interest from intermediaries and landlords” using limited company options and borrowing facilities, adding that the segment would “remain of primary importance for us as a business moving forward”.