Half of brokers predict rise in limited company lending

Almost half of mortgage brokers (49%) have said that they expect the volume of buy-to-let portfolio limited company lending they write to increase over the next 12 months, Paragon Bank has revealed.

Research conducted by BVA BDRC for Paragon’s Mortgage Intermediary Insight Report (MIIR), has also found that 38% are anticipating more non-portfolio limited company business.

Furthermore, just 14% of brokers that took part in the research said that they expect more personal name portfolio business in the next 12 months, with 6% expecting growth in personal name non-portfolio buy-to-let lending.

The research by BVA BDRC found that mortgages written to portfolio landlords operating through limited companies currently account for just under a quarter (24%) of cases placed, but brokers predict this to rise, as a result of favourable tax treatment of incorporated businesses.

A separate survey of landlords by BVA BDRC covering the first half of the year also found that 62% of all those intending to expand their portfolios plan to purchase properties within a limited company structure, which is up from 43% in Q3 2021.

Paragon Bank’s commercial director of mortgages, Louisa Sedgwick, said: “With such a strong emphasis on the specialist section of the market, lending to landlords operating as limited companies has long been one of Paragon’s strengths and we’ve seen an increase in this type of business in recent years.

“Owning properties through limited company structures can be more tax efficient because of the ability for investors to offset finance costs, such as mortgage interest, against rental income. In addition, those applying for mortgages through limited companies are often stressed at 125%, compared to the 145% that landlords applying as individuals are subject to.

“While limited company structures may not be the best option for every landlord and we’d always recommend seeking professional, independent advice, these advantages are becoming even more evident in the current market where the unsettled economy has made it necessary for lenders to tighten up stress testing. This is why I think the brokers we spoke to have got it spot on and we’ll continue to see a shift towards more limited company lending.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.