Buy-to-Let (BTL) lending specialist Paragon Mortgages has relaxed it’s criteria for limited companies looking to finance BTL purchases.

The changes follow in the wake of recent Government budget announcements regarding tax relief available on mortgage interest payments for individual borrowers.

The tax changes are likely to affect most those high and higher rate taxpayers with large borrowing who have so far taken advantage of the prevailing low interest rates to “highly gear” substantial portfolios.

The changes will mean that mortgage interest paid will no longer be treated as a business expense but as a tax credit reduction in overall tax liability, restricted to the basic rate of tax – 20% at present.

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As companies are treated differently to individuals, the tax relief for buy-to-lets held within the corporate structure will be allowed as a business expense. This is encouraging some landlords to consider incorporation, though there are other serious issues to consider. Seek professional advice before making such a move.

The specialist buy-to-let mortgage provider has removed exclusivity borrowing restrictions as Paragon says 41% of landlords are considering incorporation. The change means that landlords will be able to make best use of holding their properties in a corporate structure.

In a press release from Paragon John Heron, Director of Mortgages, said:

“We know from our latest research there are an increasing number of landlords looking into whether to incorporate, some 41% were at least considering whether to do this in Q4 last year.

“Therefore, we have updated our criteria to allow limited company landlords to have borrowings elsewhere too. This demonstrates our continued commitment to working with our landlord customers to understand their bespoke requirements and also adapt as the market changes.”

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