Landlords who utilise limited company structures have incorporated an increasing proportion of their portfolios over the past four years, according to Paragon Bank research.
In Q2 2020, 48% of portfolios held by landlords using limited companies were incorporated; this figure increased to 81% by Q2 2024.
Among landlords planning purchases in the next year, 67% intended to buy through a limited company, up from 45% in Q2 2020.
In contrast, only 31% planned to buy in their personal names, down from 36%.
The shift toward limited companies was more pronounced among experienced landlords.
The research indicated that 37% of those with four or more buy-to-let properties used limited companies, compared with just 15% of those with one to three properties.
Paragon’s Mortgage Intermediary Insight Report (MIIR) showed that 60% of brokers expected growth in business from portfolio landlords using limited companies over the next year; this marked an 11-point increase since Q1 2024.
Louisa Sedgwick (pictured), managing director for mortgages at Paragon Bank, said: “Landlords have increasingly used limited companies to mitigate the impact of tax changes phased in from 2016.
“This has accelerated in recent years as more landlords have looked for ways to run their business more efficiently amidst a challenging economic environment.
“It’s really encouraging to see that brokers appear to be switched on to this because, despite the growth, 78% of landlords still hold their properties solely in individual names.
“While incorporation isn’t necessarily the best option in every situation, and landlords should seek advice from a professional financial or tax adviser, this highlights the opportunity for those that place this type of business.”
