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Categories: limited company | buy to let mortgages | portfolio landlords

Data released from specialist buy to let lender, Paragon Bank, shows a three-year peak in the number of landlords buying property through a limited company.

The research has been conducted for the lender by insight consultancy, BVA BDRC, who gathered the data via a survey of 700 landlords.

In Quarter 1 of 2022 50% of landlords were planning to buy their next buy to let investment through a limited company structure. This figure has spiked at 62% in Quarter 2 of this year.

Specialist landlord finance broker, Commercial Trust, echoed similar findings within their own data, which showed that limited company client enquiries were up by 50% from Quarter 1 to Quarter 2 2022.

Incorporation by portfolio size

Paragon Bank’s data showed that, of landlords with small portfolio sizes between one and five properties, 47% intended to make their next purchase through a limited company.

Landlords with bigger portfolios, of six or more buy to let properties, were even more likely to buy future properties through a limited company, with 78% saying this would be their chosen route.

Intent to purchase and purchasing methods

In the 12 months ahead, 14% of landlords surveyed said they would be buying more buy to let properties.

The proportion of those landlords, looking to use a limited company buy to let mortgage to purchase, increased by a relatively modest four percentage points from the previous quarter.

However, there has been a more significant increase in the number of landlords intending to release equity from the properties they hold in their portfolios, to put down in deposits for buy to let purchases. This figure was 17% of the total intending to buy in Q1, a figure which grew to 28% in Q2.

Cash purchases have dropped in popularity, the percentage of landlord intending to buy property outright halved from 14% in Q1 to 7% in Q2.

Use a broker to navigate the changing marketplace

With so many products in the marketplace, and rate changes happening with intense frequency at the moment, as a broker, Commercial Trust are well placed to help landlords identify their suitable and cost effective deals from the thousands available.

It is vitally important, at the moment particularly, that when your mortgage advisor finds you a suitable product, you act fast in order to secure it.

If you are considering your next investment and are unsure whether to do so through a limited company, getting financial and tax advice from a professional in that field is a sensible route to take.

Paragon’s take on the increase in incorporation

Speaking for Paragon Bank, Richard Rowntree, their Managing Director of Mortgages, had this to say:

“Since midway through the last decade, tax burdens on buy-to-let investment have increased significantly. Along with the recent rise in overheads bought about by increasing energy and maintenance costs, running a letting business has undoubtedly become more costly. It is unsurprising to see more landlords look for ways to reduce their costs, with incorporation being one option for some.

“Of course, purchasing buy-to-let property through a limited company may not be the best route for all landlords so it is important that we provide customers with the complete picture to enable them to make informed decisions.”