"Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords. "
38% of landlords will use limited companies to buy property in the next year compared to just 28% as individuals, according to research for Precise Mortgages.
Among portfolio landlords, the percentage buying new property via a limited company rises to 42% while among those with up to three properties it drops to 31%. Landlords operating in London are the most likely to be planning to purchase through a limited company.
The findings underline the continued growth in popularity of limited companies among landlords. Precise's research found that 89% of brokers expect the number of landlords setting themselves up as a limited company to increase with the ability to continue to claim tax relief on mortgage interest seen as the main motivation.
Around 15% of landlords questioned intend to add to their portfolios over the coming year, buying an average of two new properties. Around 23% of those planning to buy will add three or more properties to their portfolio.
The research also found landlords with larger portfolios are significantly more aware of the Prudential Regulation Authority’s lending criteria and portfolio application process changes. Less than half (45%) of all landlords are aware of PRA changes but that rises to 67% among landlords with four or more buy-to-let mortgages.
However, 74% of those with larger portfolios say the changes have made it more difficult to secure buy-to-let finance.
Alan Cleary, managing director of Precise Mortgages, said: “Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords.
Given the predicted rise in landlords switching to limited company status this year, we can expect this trend to continue.
“The contrasting levels of awareness of the PRA’s recent changes to lending criteria and the application process between small and larger portfolio landlords points to the growing professionalisation of the latter group who stand to be the most affected."