"Landlords are increasingly looking to limited company structures because of the benefits they bring in the form of tax efficiencies and softer affordability testing."
Buy-to-let lending to limited companies hit 51% by volume in Q2, the research shows.
Of buy-to-let purchase completions in Q2, 73% were performed by limited companies, up more than 10% from 62% in Q1.
Similarly, limited companies accounted for 76% of buy-to-let lending by volume, up from 63% in Q1. This has been caused by high volumes of purchase applications from limited companies, making up 77% of buy to let purchase applications in Q1 and 78% in Q2.
The index also shows pricing improvements, particularly three and five-year fixed rates, as buy-to-let lenders seek to compete in the ever-increasing limited company space. Among buy-to-let products available to limited companies, the average three and five-year fixed rates fell by 0.4% each to 3.7% and 4.0% respectively.
This further narrows the gap with the wider market, with the average three-year fixed rate across all buy-to-let products just 0.2% lower at 3.5%
Steve Olejnik, COO of Mortgages for Business, said: “Landlords are increasingly looking to limited company structures because of the benefits they bring in the form of tax efficiencies and softer affordability testing. The structures are not without their hurdles, however, and we recommend all our clients take professional tax advice before deciding how to proceed.”
