Recent research conducted by Paragon Bank, involving a survey of over 300 mortgage brokers, suggests a notable shift in the buy-to-let mortgage sector.
According to the survey, just under half (49%) of intermediaries anticipate a higher volume of buy-to-let mortgages being written to portfolio landlords operating through limited companies in the next 12 months.
Additionally, 45% expect to see an increase in non-portfolio limited company business during the same period.
At present, nearly a third of mortgage cases (29%) are catered to portfolio landlords operating through limited companies, and 15% for non-portfolio landlords.
The research, undertaken by BVA BDRC for Paragon’s Mortgage Intermediary Insight Report (MIIR), also reveals that around 34% and 32% of brokers expect to maintain the same volume of business from portfolio and non-portfolio landlords using limited company structures, respectively.
However, only a small proportion of brokers (11%) believe they will introduce more business to both portfolio and non-portfolio landlords borrowing in their personal names over the next year.
Louisa Sedgwick, commercial director of mortgages at Paragon Bank, commented on the findings: “I think intermediaries are right to expect to see more limited company business this year. It is a structure that has become increasingly popular with landlords in recent years as they have responded to Government changes to the tax treatment of buy-to-let property ownership.
“Owning properties through a limited company can enable landlords to offset finance costs, such as mortgage interest, against rental income. It’s wise for borrowers to seek professional advice because incorporation may not be the best route for all landlords and the benefits can vary based on individual circumstances.”
These findings are consistent with Paragon’s PRS Trends report, which showed that 64% of landlords planning to invest in property in the next 12 months intend to do so through a limited company. This proportion increases to 82% among landlords with six or more properties, highlighting a clear trend towards limited company structures for property investment.
