Two thirds of landlords plan limited company BTL purchases

Nearly two thirds of landlords expect their next buy to let purchase to be made through a limited company, research reveals.

According to Paragon Bank, the long-running shift away from personal ownership is far from over, with younger and newer investors driving the change.

The study shows 63% of landlords plan to acquire future rental homes using specialist purchase vehicles (SPV).

Change driven by taxation

Paragon’s managing director of mortgages, Louisa Sedgwick, said: “Our research shows how owning property via a limited company structure has become increasingly popular over the past decade, driven by changes in taxation.

“Nearly two thirds of landlords intend to make future purchases through limited companies, so we expect the overall proportion of property held within a company structure to increase steadily in the coming years, particularly when you include those landlords who will incorporate existing property from personal name.”

She added: “It’s encouraging to see that they will continue to adapt in this way, particularly the next generation of landlords who seem to have realised the potential benefits of this ownership structure early in their lettings business careers.”

Younger landlords keener

Polling more than 500 landlords, the headline figure masks sharp differences by age.

The lender found that appetite for company ownership is strongest among those at the start of their landlord careers.

The survey found that all of the respondents aged 25 to 34 said they would buy through a limited company.

Among landlords aged 35 to 44, the proportion drops to 82%, before falling again to 73% for those in the 45 to 54 bracket.

Older cohorts remain more cautious, with 54% of 55- to 64-year-olds and 48% of landlords aged 65 to 75 planning to use SPVs for future purchases.

Limited company investment

The lender’s How limited company ownership is becoming the new normal report also points to further restructuring ahead.

Nearly a third of landlords, 32%, said they intend to move properties currently held in their own name into a company structure at some point.

Paragon’s analysis highlights how limited company ownership has risen consistently throughout the last 10 years.

It says there’s a pattern linked to tax reforms introduced in the mid-2010s.

With the ability to offset mortgage interest against rental income removed, many landlords have concluded that corporate structures offer a more workable long-term route.