"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"
- Grant Hendry - Foundation Home Loans
The share of properties held by landlords within limited companies has more than doubled over the course of the last five years, with new purchases by landlords now almost exclusively bought within such structures, according to newly released data from Foundation Home Loans.
During Q1 2020, 36% of all properties were held within a limited company, while that has increased to 74% in Q4 2024. Over the same timescale, the average number of properties held within a limited company has grown from 6.3 to 10.6.
Landlords operating with at least some of their properties in a limited company tend to have significantly larger portfolios (14.4 on average) compared to those holding all their properties in their individual names (5.2 on average). 22% of landlords now own at least one property within a limited company, with 9% holding their entire portfolio in this way.
Foundation said the results of this latest quarterly research, conducted by Pegasus Insight and comprised of 789 online interviews undertaken between June and July this year, prove that landlords are increasingly seeking incorporation and are now much more likely to have significant numbers of properties within such a structure, showing a further trend towards the professionalisation of the sector.
The lender argued that increased professionalisation and more portfolio landlords were also being shown heavily in the type of properties being bought and let out. One in five landlords now have an HMO property within their portfolio, with the average number being held at 3.1, while this increased to 29% of all larger landlords, classed as those with 11-plus properties in a portfolio.
The number of landlords with a holiday let property was now 6%, with the average number being held at 1.6, while the percentage for larger landlords was 12%.
Foundation said it had continued to see a wider number of landlords much more willing to purchase and hold specialist property types, such as HMOs and multi-unit blocks. While landlords are still much more likely to own terraced houses (62%), and individual flats (52%), 10% now own a block of individual flats.
“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," explained Grant Hendry, Director of Sales at Foundation Home Loans, "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.
He added, “At the same time, 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 an 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 own 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."
