These results also showed how limited company purchases have become the preferred option for all landlords, regardless of the size of their portfolios. Previously, landlords with larger portfolios – 11-plus properties – were more likely to say they would purchase in such a manner, but now landlords with smaller portfolios are equally likely to use the strategy; 62% of those with 1-10 properties said they would purchase via a limited company next, while 65% of those with 11-plus properties said the same thing.
Of those landlords who said they would purchase via other methods, 26% said they would purchase as an individual (up from 24%), 8% said it would depend on the circumstances at the time (down from 13%), 6% said they would purchase in the name of a partner or spouse (down from 10%), while the rest said they would either purchase via another means or they didn’t know.
The research also revealed a potential step-change in the type of properties landlords were adding to portfolios and where they were likely to concentrate in the future. HMOs continue to generate the highest rental yield for landlords at 6.5%, with 20% of landlords now having an HMO property within their portfolio – landlords typically branch out into HMOs after their fifth property, while 10% of landlords now own a multi-unit block of flats.
In terms of product numbers, according to Moneyfacts research released in November, there were over 2,600 buy-to-let mortgage products available from UK lenders. Of these, approximately 875 (33%) are products that are available for buy-to-let limited companies, special purpose vehicles (SPVs) or offshore limited companies. This represented a marked increase from 2017 when the number stood at 425 of 1,788 total products available (23.8%).
All of which means that mortgage intermediaries operating in the buy-to-let space are seeing growing demand for this type of lending and have a far wider array of options available to them and their clients. Of course, this does come with an additional layer of complexity, which underlines how important it is for landlords to deal with specialist advisers and for advisers to work with lenders who can assess cases on an individual basis and find a pathway through the complications.
So, if you’re looking to help more of your BTL clients to explore a wider range of HMO options, then why not speak to the Foundation team to get to know our offering and how we can support their ever-changing needs.