The buy to let challenge & opportunity

Limited company buy to let: challenge & opportunity

Limited company buy to let is on the up and up, making it more and more important that brokers work with lenders who understand the market dynamics, says Leeds Building Society’s Director of Mortgage Distribution Martese Carton.

It’s about ten years since rules around offsetting mortgage interest costs against income tax were announced – and nigh on a decade on we’re still seeing establishing a limited company to manage buy to let portfolios as an increasingly popular choice. Last year, a significant 50,000 landlords launched limited companies.

Couple this with ongoing interest rate volatility – where higher rates have dented landlord profitability – and limited company buy to let is emerging as the vehicle of choice for todays’ modern landlord.

As always, though, there are tricky waters to navigate. It’s clear that across the buy to let market real change is happening, and not of all it wholly good: industry data suggest that by the end of 2023, there were 13,570 buy to let mortgages in arrears, and just over half of landlords feel confident in the property market.

A daunting prospect? Perhaps. But certainly an exciting opportunity.

As responsible landlords, many buy to let investors are mindful that continuing to increase rental charges for their tenants isn’t a sustainable solution to maintain profit margins, and there are different options available to achieve success.

We know that the impact of inflation continues to bite, and many renters are unable to keep up with ongoing cost rises. Landlords are tuned into this and trading under a limited company structure can reduce the need to increase charges for tenants given the beneficial tax implications it can provide.

As the trend continues towards investing under a limited company structure, many brokers don’t feel equipped to deal with these more complex applications and can feel confused about the steps they need to take to support clients.

Market research we undertook earlier this year showed that brokers value a good application process and clear criteria when considering lenders for limited company buy to let applications.

It’s crucial, therefore, that brokers work with lenders experienced in the market and who possess the technology platform, underwriting nous and excellent BDM support that can help. The benefits, after all, are significant. Limited companies can offer tax advantages and flexibility when planning for the future.

As increasing numbers of limited company buy-to let-cases are landing on lenders’ desks, in the changing mortgage landscape we want to do everything within our gift to empower brokers and build more confidence in limited company buy to let lending.

Find out more about Leeds Building Society’s Limited Company Buy to Let offering.