Landlords opting to be companies after Osborne shakes up buy-to-let with stamp duty hikes and mortgage interest claim caps
The Chancellor's recent changes to the buy-to-let rules have caused landlords to rush to incorporate.
According to figures released today by Kent Reliance, a quarter of the demand for buy-to-let mortgage finance the banking company receives now comes through limited companies.
Across the total buy-to-let market, Kent Reliance predicts that 56,800 buy-to-let loans will be issued to companies in 2016, up more than a fifth from its estimated total of 46,700 for 2015 and up 90 per cent from 29,900 in 2014.
“The Chancellor has trained his sights on buy-to-let, given the sector’s rapid rise in value, but the changes to the tax treatment in the last six months will bring unintended consequences,” said Andy Golding, chief executive of OneSavings Bank, which operates through the Kent Reliance brand. “First, the rush to put properties inside a limited company will be sustained, especially if larger scale investors are indeed exempted from the new stamp duty surcharge. Secondly, the buy-to-let market will see activity hit overdrive between now and April as landlords seek to beat the stamp duty deadline.”
In the July budget, George Osborne unveiled a cap on the amount of interest on mortgage payments that buy-to-let landlords can claim. More recently, in the Autumn Statement, the Chancellor revealed an additional three per cent charge to stamp duty for buy to let properties.