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Landlords flock to limited company mortgages

More than two out of five landlords are either moving or considering moving their buy-to-let portfolios into corporate structures ahead of forthcoming tax changes.

Larger landlords are most likely to make the switch as the tax changes will affect them most, according to new research by Paragon Mortgages.

Its research showed that 41% of landlords are considering moving their portfolio into a limited company following the Chancellor’s decision to limit higher-rate tax relief from April 2017.


A further 5% have already established limited companies. 

For larger landlords with 20 or more properties, 14% are already operating as limited companies, while 63% are considering it.

Paragon's research also showed that 43% of landlords say the stamp-duty increase will affect their buy-to-let purchasing plans over the next couple of years. 

This figure rises to 63% for larger landlords with 20 or more properties.

Landlords also report that tenant demand remains high, with yields stable at an average 5% across the UK.

The North West saw the highest yields at 6.2%, while outer London had the lowest at 5.1%.

John Heron, director of mortgages at Paragon, said: “Recent government interventions into the buy-to-let market are now beginning to impact landlord sentiment and plans. 

“The fundamental drivers of the market however – tenant demand and yields – remain strong so there are competing dynamics at play.

“It is interesting to see that concern about the impact of changes to stamp-duty and tax relief is greatest among larger landlords. 

“This concern is likely to grow now that the government have confirmed that landlords with larger portfolios will have to pay the increased rate of stamp-duty on buy-to-let purchases.”


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