A rising number of landlords are forecast to take out buy-to-let mortgages this year through a limited company, according to brokers.
Analysis by Paragon Bank found just under half of mortgage brokers surveyed said they expected to place more limited company buy-to-let business throughout the next year as the structure becomes increasingly popular.
Using a limited company to run buy-to-let portfolios offers tax benefits to landlords and therefore is favoured by those in high income tax brackets or those who rent out multiple properties.
Paragon said, at the moment, nearly a third of mortgage cases (29%) were written to portfolio landlords operating through limited companies and 15% for non-portfolio landlords.
But the survey of over 300 brokers suggested, in 2024, a higher volume of buy-to-let mortgages written to portfolio landlords operating through limited companies was anticipated by 49% of intermediaries. In addition, 45% expected an uptick in non-portfolio limited company business during the next 12 months.
Louisa Sedgwick, commercial director of mortgages at Paragon Bank, said: “I think intermediaries are right to expect to see more limited company business this year.
“It is a structure that has become increasingly popular with landlords in recent years as they have responded to government changes to the tax treatment of buy-to-let property ownership.
“Owning properties through a limited company can enable landlords to offset finance costs, such as mortgage interest, against rental income.
“It’s wise for borrowers to seek professional advice because incorporation may not be the best route for all landlords and the benefits can vary based on individual circumstances.”
In a separate study, undertaken as part of Paragon’s PRS Trends report, it emerged that 64% of landlords who planned to invest in property in the next 12 months would do so through a limited company, compared to 15% who would finance in personal name.
This limited company purchase intent proportion is averaged across the range of portfolio sizes and increases to 82% amongst landlords with six or more properties.
