OneSavings Bank chief John Eastgate believes "great stability" is on its way with the news emerging that more than half the value of buy-to-let lending in Q2 was provided to limited companies.
According to the latest edition of the Limited Company Buy to Let Index, limited companies borrowed more per quarter than individual landlords for the first time, including both purchase and remortgage transactions.
And Mr Eastgate, the bank's sales and marketing director, said: “The changes to mortgage tax relief have only added to landlords’ growing tax burden and the buy-to-let sector has seen a definitive shift towards limited company lending, with 24% of investors considering incorporating or transferring property to spouses.
"Against a backdrop of political and economic uncertainty, investors’ confidence has also been knocked by weakening house price growth and new lending restrictions which will fundamentally alter the mix of landlords. We are already seeing signs of amateur landlords leaving the market, paving the way for committed landlords, which will lead to greater stability and professionalisation of the sector.”
Limited company structures are particularly common when making new purchases, and Q2 proved no exception. Of buy-to-let purchase completions this quarter, 73% were performed by limited companies, up more than 10% from 62% in Q1.
Similarly, limited companies accounted for 76% of buy to let lending by volume, up from 63% in Q1. This has been caused by high volumes of purchase applications from limited companies, making up 77% of buy to let purchase applications in Q1 and 78% in Q2.