Corporate Buy-to-Let Loan Boom Expected in 2024

A boom in corporate buy-to-let loans is coming as property investment businesses are expected to take off during the next 12 months in 2024.

The bonanza is predicted by almost half of mortgage brokers asked for their views about how limited companies will perform in the private rental sector this year.

The brokers say they expect to write more limited company mortgages for portfolio landlords, while 45 per cent forecast a rising number of non-portfolio landlord mortgages.

Industry data shows around a third of buy-to-let mortgages are taken out by portfolio landlords operating as limited companies and 15 per cent by non-portfolio landlords. However, only 11 per cent of brokers believe the market for landlords borrowing in their own names will see an increase in mortgage applications.

Louisa Sedgwick, Paragon Bank’s commercial director of mortgages, said: “I think intermediaries are right to expect to see more limited company business this year. It is a structure that has become increasingly popular with landlords in recent years as they have responded to government changes to the tax treatment of buy-to-let property ownership.”

“Owning properties through a limited company can enable landlords to offset finance costs, such as mortgage interest, against rental income.”

Paragon cuts rates

Falling mortgage interest rates and the hope of more cuts have prompted the bank to revamp a range of five-year fixed-rate offerings.

New deals start at 4.89 per cent for buying or remortgaging self-contained green homes with an energy performance (EPC) rating of C or above.  New rates also apply to shared houses (HMO) and multi-unit blocks (MuB).

Other buy-to-let lenders have trimmed their rates.

Skipton has shaved 0.46 per cent of buy-to-let loans offered through brokers with a five-year fix at 4.49 per cent at 75 per cent loan-to-value.

Newcastle Building Society has also cut rates by 0.3 per cent for landlord applications through brokers. The range of mortgages includes a two-year fix at up to 80 per cent loan-to-value from 5.1 per cent with a £999 product fee.

Best buy-to-let mortgage deals

According to buy-to-let mortgage monitor Moneyfacts, among the best deals for limited company mortgages is a 3.94 per cent two-year fix from Molo FInance at 75 per cent loan-to-value (LTV). The lender charges a 4.5 per cent arrangement fee.

Other best deals for portfolio landlords trading as limited companies are:

  • A 4.99 per cent one-year fix with The Mortgage Works (TMW) at 75 per cent LTV with a 2 per cent arrangement fee.
  • A 4.09 per cent two-year fix with Landbay at 75 per cent LTV with a 6 per cent arrangement fee.
  • Aldermore has a 4.29 per cent five-year fix at 75 per cent LTV with a 7 per cent arrangement fee.
  • Kensington has a five-year fix at 4.79 per cent at 70 per cent LTV and with a 5 per cent arrangement fee.

Thousands of landlords have opted to trade as buy-to-let companies following a series of tax and regulatory changes introduced by the Tory government since 2010. The primary measure was restricting mortgage interest repayment relief for higher rate (40 per cent ) taxpayers.

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Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.