UK landlords are now mostly applying for buy to let mortgages through limited companies. Their use for new property purchases has tripled since changes to tax relief on mortgage interest were announced in July 2015. Average buy to let mortgage rates fell to 3.3% in September from 3.7% in June. While rates available to limited companies are higher, at an average of 4.3%, investing through a company may work out cheaper for higher rate taxpayers who will be affected by relief rule changes due to be implemented in stages between 2017 and 2020.
Key Takeaways:
- More than half of applications from UK landlords purchasing buy to let properties were through a limited company in the third quarter of 2016, the latest index shows.
- 63% of applications were from limited companies, up from just 21% before the changes to tax relief on mortgage interest were announced in July 2015.
- Evidence from a number of sources suggests that more landlords in the UK are forming limited companies ahead of tax relief changes which are due to be introduced between 2017 to 2020.
“‘The proposed changes to tax relief on financing costs is likely to affect the way higher rate tax paying residential property investors choose to finance their portfolios,’”