The property media is rife with the idea that landlords are turning to owning property with a company in a bid to avoid tax changes.
Companies House and the Office of National Statistics cannot support the claim and both say they neither track the data nor have seen evidence of large numbers of property investors moving to corporate structures or limited partnerships.
But buy to let and HMO lenders have jumped on the bandwagon.
According to money information website Moneyfacts, around 300 buy to let loans are on the market – more than double the 133 mortgages advertised a year ago.
The site also monitors the number of individual buy to let deals and reveals that 12 months back, corporate buy to let had a 10% slice of the 1,315 deals on offer. This has grown to 19% of 1,530 deals a year later.
“This shows how rapidly the market is expanding, and highlights that providers are increasingly willing to accommodate this growing sector of the market given such heightened demand,” said a Moneyfacts spokesman.
However, many of these lenders are not enthusiastic about corporate lending and have such tight criteria, only a few landlords can meet their standards.
Corporate buy to let mortgages also come with other restrictions.
The cost of entering the market is high as interest rates and administration fees are ratcheted up from the level of personal loans.
Loan to value is likely to be lower as well, demanding a bigger deposit.
The impact of these factors is taking out a corporate buy to let loan becomes expensive – just the effect the government wanted.
Add to that the extra admin costs that come with a company, such as more detailed accounts, Companies House returns and time managing the business and it is worth asking if a cost\benefit analysis discloses whether the money spent really saves any tax.
