"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"
- Louisa Sedgwick - Paragon Bank
The survey of over 300 brokers, commissioned by Paragon Bank highlights how a higher volume of buy-to-let mortgages written to portfolio landlords operating through limited companies is anticipated by 49% of intermediaries. In addition, 45% expect an uptick in non-portfolio limited company business during the next 12 months.
Currently, 29% of mortgage cases are written to portfolio landlords operating through limited companies and 15% to non-portfolio landlords.
According to the research, undertaken by BVA BDRC for Paragon’s Mortgage Intermediary Insight Report (MIIR), around a third, 34% and 32% respectively, think that they will see the same volume of business from portfolio and non-portfolio landlords utilising limited company structures.
A significantly lower proportion of brokers, 11%, think that the next 12 months will see them introduce more business to both portfolio and non-portfolio landlords borrowing in personal name.
The findings align with those of a separate study, undertaken as part of Paragon’s PRS Trends report, which found that 64% of landlords who plan to invest in property in the next 12 months will do so through a limited company, compared to 15% who will 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.
Louisa Sedgwick, Paragon Bank Commercial Director of Mortgages, 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.”
