The share of properties held in a limited company doubled from 36% in Q1 2020 to 74% in the last quarter of 2024, a lender found.
Research from Foundation Home Loans found that the average number of properties held within a limited company had also increased from 6.3 to 10.6.
Landlords with at least some of their properties in a limited company are more likely to have larger portfolios, at an average of 14.4. This compares to those holding all their properties in the individual name, with these landlords having 5.2 on average.
Foundation Home Loans found that more than a fifth – 22% – of landlords have at least one property held in a limited company and 9% have their whole portfolio in this way.
Foundation Home Loans said the survey indicated that landlords were increasingly moving towards incorporation and more likely to have multiple properties in this structure, resulting in a professionalisation of the private rented sector (PRS).
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.
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“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.”
Landlords investing in specialist properties
A fifth of landlords had a house in multiple occupation (HMO) property in their portfolio, holding an average of 3.1 properties. The share of investors with HMOs rose to 29% among larger landlords.
Some 6% of landlords had a holiday let, with 1.6 properties on average. Again, a bigger share of larger landlords had this property type, at 12%.
Foundation Home Loans said it noticed more landlords buying and holding specialist property types such as HMOs and multi-unit blocks. Landlords were still more likely to hold terraced houses, with 62% doing so, while 52% had individual flats. However, a tenth also owned a block of individual flats.
Hendry said: “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.
“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.”
