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Landlords favour limited company status for new BTL purchases

Nearly two out of five (38%) landlords will use limited companies to buy properties over the next year compared to 28% as individuals, new research conducted by Precise Mortgages has revealed.

According to the specialist lender, among landlords with more than four properties, 42% are now buying new property via a limited company, while only 31% of landlords with up to three properties are doing so. Landlords operating in London are the most likely to purchase via limited company.

The findings represent the increasing popularity landlords using limited companies to purchase properties. In fact, 89% of brokers predict the number of landlords setting themselves up as a limited company to increase in order to claim tax relief on mortgage interest.

What’s more, 15% of landlords intended to add an average of two new properties to their portfolios over the coming year, while 23% of those planning to buy will add three or more properties to their portfolio, according to research from BDRC.

The study also found landlords with larger portfolios are significantly more aware of the Prudential Regulation Authority’s (PRA) lending criteria and changes to the portfolio application process. Some 45% of all landlords are aware of PRA changes, compared with 67% among landlords with four or more buy-to-let mortgages.

“Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords,” said Alan Cleary, managing director of Precise Mortgages.

He said given the predicted rise in landlords switching to limited company status this year, the trend is likely 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.”

  • G romit

    No s**t - never expected that to happen!!

    Why does a private Landlord who has set up a limited company to buy properties through suddenly become more professional?

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