Following last year's upheaval in the buy-to-let (BTL) market, many landlords started considering setting up limited companies to avoid the negative impact of certain tax changes. Given the increased demand for BTL deals that are available to limited companies, it's not surprising that providers are now offering more fixed products for them than ever before.
This is according to our own figures, analysed by finance expert Charlotte Nelson, who found that "the number of fixed rates available to limited companies has almost tripled in the space of just two years." As a result, there are now 235 such mortgages available – the highest number on our records.
|Apr 13||Apr 16||Apr 17||Apr 18|
|Number of fixed limited company mortgages||17||80||212||235|
"The reality of last year's tax changes hit landlords hard, as they were unable to claim tax relief," said Charlotte. "With things working slightly differently for limited companies, many landlords started to shift their focus from individual ownership to this type of private company."
Naturally, providers have responded to this increased demand by offering more mortgages to them. Yet, despite there now being more of these products than ever, it's still less than a quarter of the BTL market that offers this option.
That's why borrowers considering this type of mortgage should be wary, as they may find that the rates they are offered are higher than for the rest of the market. Charlotte points out that "the average two-year fixed BTL mortgage rate, for those applying as a limited company, stands at 4.29% today, whereas the average two-year fixed rate for the rest of the market is significantly less at 3.01%."
Combined with all the hassle and paperwork that's involved with becoming a limited company, not to mention the potential costs, Charlotte warns "any borrowers considering it" that they "should consult a financial adviser and do the sums before committing to this option."
To get an idea of what kind of rates you can currently get, have a look at the BTL charts
If you're not sure what the right option for you is, why not speak to an adviser?
Want to know more about how to set up a limited company? We've run through the basics here
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.