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Maximising the limited company mortgage opportunities
It’s no secret that regulatory shifts and tax changes have impacted BTL margins in more recent times and that a strong proportion of landlords – especially those at the more professional end of the spectrum – are carefully evaluating a range of options to help reduce tax burdens, increase yield and manage their outgoings.
On the back of these factors, a key focal point for such landlords has been the rise in prominence of limited company lending. This was evident in the latest Q2 2022 BVA BDRC Landlord Panel research which outlined that over 6 in 10 landlords (62%) intend to purchase their next BTL property within a limited company structure, the highest proportion for three years and up from 50% in Q1.
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The research also highlighted that the propensity to incorporate tends to increase with portfolio size. For example, those with larger portfolios are significantly more likely to purchase in a limited company structure, with 78% of 6+ property landlords looking to buy in this way compared to 47% of those with 1 – 5 properties. In contrast, 24% plan to purchase as an individual, down from 31% in Q1 ‘22.
In addition, 21% of landlord respondents were suggested to hold at least one of their properties as part of a company; this increased with portfolio size with 48% of 20+ property landlords holding some or all of their portfolio in a limited company structure. On average, for those who have a limited company 9.0 of their properties are held in this way.
This data certainly reflects the increased demand for limited company lending that we are currently experiencing from portfolio landlords. A swathe of remortgage business also continues to take place from a limited company perspective, and this is an area where brokers can really demonstrate their support and expertise.
Read about how many landlords plan to mortgage limited companies in Q1
With opportunities around limited company borrowing on the up, this outlines how important it is for advisers to work with lenders who are fully immersed within this area and who fully understand such clients specific – and often complex – needs.
If you like to cut through this complexity and help more of your landlord clients to potentially benefit from a limited company option, then why not speak to our specialist BTL team today.
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