Rise in new companies due to landlord tax changes
According to research from Kent Reliance, there has been a surge in the number of people incorporating a new company, with the main reason being the changes to the tax treatment of buy to let landlords.
The third 'Buy To Let Britain' report from the lender claims that changes in the Budget earlier in the year had already caused more landlords to incorporate. It cites an immediate increase in applications from limited companies following the July Budget.
The report found on average that there are 5,000 applications each month, but by September, this figure was up by 213% year on year.
Mortgage finance demand for buy to let through limited companies now makes up 25%r of the total, a rise from 13% last year.
The report also forecasts that 56,800 buy to let loans will be issued to companies in 2016, which will be an increase of more than a fifth compared to the estimated total for 2015, which stands at 46,700.
Even more strikingly, this figure would be up 90% on the total of 29,990 in 2014.
Andy Golding, the chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands in buy to let, commented on his firms's report.
Golding said: "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."