Foundation Home Loans Q4 landlord research found that the share of properties held within limited companies has doubled in five years.
In Q1 2020, 36% of all properties were held within a limited company, compared to 74% in Q4 2023.
The average number of properties held within a limited company rose from 6.3 in Q1 2020 to 10.6 over the same period.
Landlords with properties in a limited company tend to have significantly larger portfolios, averaging 14.4 properties, compared to 5.2 for those holding properties in their individual name.
22% of landlords own at least one property within a limited company, with 9% holding their entire portfolio this way.
Grant Hendry, director of sales at Foundation Home Loans, said: “The shift towards landlords holding their properties within a limited company structure is clear to see from the latest results of our Landlord Trends report.
“Indeed, almost all new purchases by landlords are within a limited company, which perhaps tells you all you need to know about the impact of the cut to mortgage interest tax relief on individuals and the need for landlords to incorporate in order not to be hit by this.”
Hendry added: “At the same time, landlords of all sizes are recognising the ongoing need for diversification, particularly across property type, which can often deliver a more sizeable rental yield than ‘traditional’ properties.
“Hence why we now have one in five of all landlords owning a HMO, while this number rises to 29% for those that we might class as larger landlords.
“At the same time, landlords are now more likely to own a holiday let property, with those that do owning 1.6 on average.”
He said: “One of the ongoing trends we have seen for some time is that of landlords seeking out these different property types, often housing multiple tenants in either HMO or multi-unit freehold block structures, because there is strong tenant demand and due to the allure of higher yields.
“Our product range offers a number of different mortgage options across these property types, plus also in areas like mixed-use properties, semi-commercial and the like.
“We are likely to see established landlords much more interested in such portfolio diversification and we have a tailored range of mortgage options available to advisers acting on behalf of clients in this space.”
