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Number of limited company BTL products at record levels, says Moneyfacts

The number of limited company fixed rate buy-to-let products hit a record high this month as mortgage lenders respond to changing market conditions.

With the government currently phasing out mortgage interest relief, many landlords are looking for ways to hold on to more of their profits, and for some, setting up a limited company provides the solution, which largely explains why there are now more limited company fixed rate BTL products than ever before.

According to Moneyfacts, there are currently 235 products on the market, up from 212 in April 2017 and 80 the April before.

Charlotte Nelson, finance expert at moneyfacts.co.uk, commented: “The reality of last year’s tax changes hit landlords hard, as they were unable to claim tax relief. However, with things working slightly differently for limited companies, many landlords have started to shift their focus from individual ownership to this type of private company.”

However, borrowers considering this type of mortgage should be aware that they could find themselves on a more expensive deal compared to the rest of the buy-to-let market, according to Nelson.

She points out that the average two-year fixed rate limited company loan, for instance, has a rate of 4.29%, while the average two-year fixed rate for the rest of the market is 3.01%.

Nelson added: “With all the extra legwork that becoming a limited company entails, and how widely the costs can vary depending on circumstances, any borrowers considering it should consult a financial adviser and do the sums before committing to this option.”

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