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  • Mortgages & Finance

    Change in landlord behaviour re: Ltd Co's



    New data from Mortgages for Business has revealed that 63% of applications by landlords purchasing buy to let properties are being made using a limited company structure.

    This figure is up from just 21% before the changes to tax relief on mortgage interest were announced by George Osborne in July 2015. This represents a sea change in landlord behaviour and includes both new purchases and “transfers”, i.e. purchases made by landlords selling their personally owned property to their limited company.

    In contrast, the number of remortgage applications made via a limited company has remained at a fairly similar level and aren’t expected to rise greatly until those who have recently used a corporate vehicle to purchase property are free from early repayment charges.

    In terms of market share, buy to let mortgage products available to limited companies now accounts for 16% of all products, up from 13% in the first half of the year. By number however, availability has remained stable at 195 (average) because the overall number of BTL products on the market dipped slightly.

    Full/source story 

    UP NEXT  -      Buying a property in limited company structure vs. in your own name          

    SEE ALSO -     Buy to let goes from "strength to strength"
                               
    DON'T MISS -   Advantages and Disadvantages of a Limited Company Purchase 

    NOW WATCH: 

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    One may presume "Mortgages for Business" name may skew there statistics? from a lead generation point of view.

    Though there is certainly a growing trend to Limited Company Buy to Let.

    When it comes to a new purchase id say its more of a 50/50 choice depending on personal circumstances.

    For Instance:
    People tend not to remortgage out of personal name to LTD Co - because of Tax Issues.
    Accidental Landlords / Next time Buyers are stickign to personal name - because of Tax Issues.
    Portfolio Landlords are certainly looking more towards Ltd Co BTL for new Purchases, though not existing stock.

    The reasons why are obvious - the Tenant Tax.
    Though SDLT and Capital gains is a big concideration for many landlord profiles (i.e. accidental landlords, remortgage2Ltdco Landlords) and then you have the rather personalised Income Tax conciderations that may come into play.

    Overall I think LTD Company Buy to Let will be the future. Its rather mixed at the present and requires quality advice.

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    THIS PROPERTY TRIBES ACCOUNT IS NO LONGER USED. DO NOT SEND PRIVATE MESSAGES.

    YOU CAN REACH ME AT BESPOKE FINANCE for HMO Mortgages, Cheap Life Insurance and Limited Company Buy-to-Let on 08009202001

    Interesting line from the latest CML report for August:

    Suggestion that a trend is developing in the BTL mortgage market?

    • Landlords borrowed £3bn, unchanged month-on-month but down 12% year-on-year. This came to 19,400 loans in total, up 4% compared to July but down 13% compared to August 2015.




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    Tax relief limited to 18%, corporation tax payable on profit from sale and then further tax if money taken out of company, higher interest rate than individual BTL rates, less choice of lenders.  Very easy for government to have different tax treatment for property or investment companies to trading companies.

    Why is the company route being viewed so positively?

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    any taxation can change as we all know

    But Companys have always been great supporters of the Torys

    It is much harder for a Govt to chage the rules for Companys because of the power they have

    We on the other hand are a bunch of Landlords who have grown too big for our boots

    and we are not a bussiness after all said and done

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Very easy for government to change rules for any particular type of company, e.g. Property and investment companies.  Apart from which why is the corporate route considered so attractive, refer back to comments in previous post re tax etc.

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    You have to remmember Co are so much more accountable

    any one can see what a Company owns and makes

    Corp Tax is only one part of the story

    If a Director wants income be it Salary or Dividend  its very tax efficant for the HMRC

    Companeys have double taxation in point of fact

    I know if I take dividend income my tax rate is over 50%

    If I take a salary of more than 8K  i pay Tax NI & the Company will also pay employers NI

    as a BTL landlord now my Max Tax rate would be 45%

    every house i own is also listed at Companys House  and I were to sell a Property I would pay a great deal more tax than an individal sole owner

    Its the Model the Govt want

    because it genarates more tax than sole ownerr BTL

    Of course its not for everyone but I think there is a greater risk of S24,B and all tax relife going for individal Landlords

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    DL, you keep saying on various threads that companies have double tax - that is simply not true.

    The rates at which a company is taxed and an individual is taxed are pretty similar (or slightly better for a company) until you get to 100k per year. At 100k per year a company becomes MUCH better. If you take money over 8k by way of dividends rather than salary, then neither you nor the company will pay any NI at all. 

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    let me expline why i think about double taxation

    a BTL landlord will pay in genaral two tax rates 20% or 40%  in the bussiness is in a personal name

    Company Landlords will pay the following if they take dividends

    Basic rate Landlords will pay 20% Corp Tax and 7.5% so there tax rate is 27% which is 7% higher

    Higher Rate Landlords will pay 20% corp Tax and 32.5% so there tax rate will be 52.5% which is 12.5% Higher

    I know the first 5k is Tax free and you dont pay NI but in genaral company landlords will pay more Tax

    Dont forget the 5k tax  free is not in addition to the tax free personal allowance so if you were a higher rate tax payer to start with it would not work out well

    They have you over a Barrel

    and your right if you were to take a salary of over 8K a year you will have employee NI and Employer NI 

    Thats why its double  taxation

    Also accountancey charges are higher with in a company rather than personal

    when added  together higher rate tax payers will have a tax rate of around 60%

    hope that helps DL

    and


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Increasing numbers of landlords are looking to get around the mortgage interest relief changes by incorporating, and its tenants who will bear the brunt of extra stamp duty, Kent Reliance has revealed.

    The lender’s Buy to Let Britain report, which looks at the sector up to the first quarter of 2016, found that in the first three months of the year, four in ten applications for BTL mortgages have been via limited companies and they expect more than half to use this route by the end of the year.

    A fifth of applications in 2015 were through limited companies, compared with 15% in 2014.

    Across the whole market, just under 38,000 limited company loans were issued in the period, nearly four times the 10,100 a year ago, according to the report.

    Full/source story

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    With stats like that, expect more Mortgage Companies entering the LTD Co offering.

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    THIS PROPERTY TRIBES ACCOUNT IS NO LONGER USED. DO NOT SEND PRIVATE MESSAGES.

    YOU CAN REACH ME AT BESPOKE FINANCE for HMO Mortgages, Cheap Life Insurance and Limited Company Buy-to-Let on 08009202001