Limited company mortgages at all-time high in buy-to-let market

Limited company mortgages at all-time high in buy-to-let market

Landlords across the country have been considering their options after Section 24 tax changes began to be phased in last year, with many choosing to set up limited companies as a way to beat the taxman.

Back in April 2013, there were just 17 fixed-rate limited company mortgages available on the market, according to research by This figure has since soared exponentially, hitting 80 in April 2016 and 212 in April 2017, before reaching a record high of 235 fixed-rate deals for limited companies in April this year.
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By and large, the change in what lenders are now offering has been put down to a huge increase in demand for such products since tax changes began to take effect for landlords last year.

Section 24 of the Finance Act is basically an overhaul of the way landlords can offset their mortgage and borrowing interest payment costs against their final income when doing their tax returns. Since April last year, landlords have only been able to claim back 75% of their financing interest costs, and this will be further phased out to zero by April 2020 – meaning many landlords will see their tax bills increase.

Limited companies can help some landlords – but not all

Setting up a limited company through which to run buy-to-let properties has become a popular way for landlords to avoid this, as mortgage interest payments are treated differently.

Charlotte Nelson, finance expert at, said: “Providers who are still eager for buy-to-let business have put their best foot forward and are now offering more products than ever to meet this extra demand. Yet, despite there being more products on the market, under a quarter of the BTL market offers this option.”

She warned that many borrowers will find limited company mortgages a more expensive option compared to other buy-to-let products – so it is important to weigh up the costs and do the maths to see if it is worth doing, compared to the effects of the tax changes.

“For example, the average two-year fixed rate BTL mortgage, for those applying as a limited company, stands at 4.29% today. Whereas the average two-year fixed rate for the rest of the market is significantly less at 3.01%.”

Borrowers are advised to consult a financial adviser before resorting to the option of transferring ownership to a limited company, as there is extra legwork involved as well as the potential for higher mortgage rates.

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