Are you considering the Limited Company option?

With rates holding low at 0.25%, investing in property could still be a good idea for many. This is despite the tax changes that are due to begin from April 2017, at which point the tax relief that landlords of residential properties receive for finance costs will start to be restricted to 20%. This change will be gradually phased in to be fully in place by April 2020.

So why limited companies?

Limited companies set up for the sole purpose of buying and letting property, will not be affected by the upcoming changes. That’s why many landlords are considering setting up limited companies to mitigate the personal impact. As this demand for limited company loans increases leading up to April, some lenders have updated their product ranges to cater for this emerging demand.

Research from leading buy to let specialist lender Kent Reliance has revealed that more landlords are already moving their buy to lets into limited companies. In fact, the lender revealed that over 100,000 buy to let mortgage loans have been issued for limited companies before December in 2016. This is double the figure of the whole of 2015, suggesting that more and more people are considering the option.

But is this option right for you?

There is no easy answer, although it may be a possible solution for some circumstances. You may be considering using the limited company strategy whether you are a professional landlord, an investor with a portfolio or even looking at purchasing your first buy to let property.

Although there is no way to avoid the changes in stamp duty on second homes, becoming a corporate entity may indeed mean avoiding the changes in tax relief. But this is a complicated area and these tax changes will often affect each landlord differently. That’s why talking to us about your mortgage needs and seeking tax advice from your accountant, will help prepare you for any decision on your buy to let investment.