Around 69% of landlords who are intending to buy properties this year say they will do so via a limited company structure.
According to research from Paragon, which surveyed 789 landlords in Q4 2024, this was the second highest on record, nearing the high of 74% planning to buy via a limited company structure in Q2 2023.
Nearly one in 10 surveyed said they owned all their properties in a limited company structure, which rises to 28% when the landlord owns four or more properties.
An additional 13% said they owned in a mix of personal name and limited company, but the balance tends to be in favour of limited companies, as 74% of properties in these portfolios are held in business structures.
The report noted that almost half of landlords bought through a limited company due to personal income tax benefit, and 42% pointed to mortgage interest relief.
A third pointed to corporation tax rates on profits and 27% said inheritance tax planning was a benefit.
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Over half of landlords who hold property in their personal name said the cost of moving assets into a corporate vehicle was the main barrier, followed by capital gains tax (CGT) uncertainty at 32% and administration costs and the effort of running a limited company at 31%.
Approximately 78% of landlords said they still owned property in their personal name.
Jason Wilde, Paragon Bank’s head of mortgage sales, said: “The trend towards limited company structures has accelerated in more recent years, mainly due to changes to mortgage interest relief, but also landlords considering inheritance tax planning.
“Over 80% of our customers are now purchasing within a limited company structure. As many of them operate as SMEs, adopting a business structure makes sense and is more tax-efficient. Limited companies also benefit from an interest cover ratio of typically 125%, versus 145% for higher-rate taxpayers buying in personal name, so it broadens the availability of buy-to-let mortgage finance.”
