The UK mortgage market is witnessing a significant shift as company buy-to-let (BTL) ownership has overtaken private ownership in the 11-20 property bracket, now accounting for 51% of holdings. This change highlights a growing trend among landlords to utilise corporate structures for property investment, which has implications for borrowing costs and market dynamics.
What does the data reveal about ownership trends in the mortgage market?
Recent reports indicate a notable increase in company ownership among landlords, particularly those with larger portfolios. For landlords owning 20 or more properties, company ownership rises to 57.6%. In contrast, privately held properties have seen a decline, dropping from 67.1% to 42.4%. This trend is particularly pronounced in regions like the North East, where 53.5% of BTL properties are held through companies, followed closely by Yorkshire and the Humber at 53%.
How does this impact borrowing costs in the mortgage market?
Landlords should be aware of the differing borrowing costs associated with property ownership structures. The average mortgage rate for privately owned properties stands at 4.76%, whereas company-owned properties face higher rates of 6.44%. This disparity could influence the decision-making process for landlords considering the structure of their property investments. For more information on rates, check out our current mortgage rates.
What this means for landlords and investors
The shift towards company ownership may offer certain tax advantages and liability protections for landlords, making it an attractive option for those with larger portfolios. However, the higher borrowing costs associated with company ownership could offset some of these benefits. Landlords should carefully evaluate their strategies in light of these trends, particularly as 45.1% of BTL ownership is already in corporate structures.
Frequently asked questions
What are the benefits of company ownership for landlords?
Company ownership can provide tax efficiencies and limited liability, making it a popular choice for landlords with extensive portfolios.
How can landlords navigate the changing mortgage market?
Landlords should stay informed about current mortgage rates and consider consulting with a financial advisor to assess the best ownership structure for their investments.