"The buy to let market now sits firmly in the crosshairs of both politicians and regulators, and we are seeing landlords react."
Buy-to-let lending to limited companies soared to nearly 38,000 in Q1 2016, higher than the total for the whole of 2014.
The number of loans to limited companies is expected to reach 100,000 by the end of 2016 - nearly 40% of the total number of buy to let loans.
Kent Reliance’s data shows mortgage applications via limited companies increased by over 80% in 2015 compared to 2014. In total, limited company loans accounted for more than one in five buy to let mortgages last year.
Increased taxation and regulation comes as the private rental sector continues to grow in size. In Great Britain as a whole, more than quarter of a million new renting households were formed in the last year, increasing the total by 5.5%.
The value of a rented home is also climbing, rising by an annual rate of 9% currently. As a result, the value of the sector has increased by £156bn in the last year to £1.2 trillion, making it more than half the size of the UK stock market.
Andy Golding, Chief Executive of OneSavings Bank, commented: “The buy to let market now sits firmly in the crosshairs of both politicians and regulators, and we are seeing landlords react. Thousands hurried purchases to beat the stamp duty deadline, and the popularity of limited companies is soaring as investors seek to reduce tax exposure. But it is tenants who are feeling the real brunt. Rents are rising, and landlords will increase them further as they pass on the increased cost of running their businesses. Far from supporting tenants, recent intervention will see them bear a heavier financial burden.
“Increasing landlords’ tax bills won’t alter the root cause of the UK’s housing crisis. As long as the demand for homes every year far outweighs the number of new houses, the only way to reduce the cost of housing in this country for tenants and first-timers alike is to build more. We need to see a paradigm shift, moving the focus from sustaining demand to expanding supply in all tenures.”
