"The trend towards holding properties in limited companies doesn’t seem to be slowing down. In fact, these figures show that it’s actually growing amongst landlords who have found it can deliver benefits"
- Louisa Sedgwick - Paragon Bank
Research conducted by Pegasus Insight on behalf of Paragon Bank found that 12% of landlords use a mixture of individual and limited company ownership. Of those, an average of 76% of the portfolio, or 13.1 properties, were incorporated at the end of the third quarter of the year.
This is up from an average of 36% of portfolios, or 6.3 properties, that were incorporated in the first quarter of 2020 and nine properties during the same period in 2023.
According to the research, individual ownership remains the most prevalent structure, with 79% of landlords holding their portfolios in their own name. The remaining 9% is made up of landlords who have incorporated their entire portfolios.
These figures represent the average across all portfolio sizes and we see that limited company ownership is more prevalent amongst landlords with larger portfolios. The research revealed that just 7% of landlords with between one and three buy-to-let mortgaged properties have incorporated their entire portfolios.
This increases to 28% amongst those with four or more, skewing the average number of properties held in limited companies compared to the overall average portfolio size – 13.1 vs 8.0.
“The trend towards holding properties in limited companies doesn’t seem to be slowing down. In fact, these figures show that it’s actually growing amongst landlords who have found it can deliver benefits, particularly around how much their income is taxed," said Louisa Sedgwick, Managing Director for Mortgages at Paragon Bank.
However, according to Sedgwick, “Despite this, we see that the majority of properties, 79%, are owned solely in individual names, hinting at the potential opportunities for limited company lending business. Brokers can add another string to their bow by generally upping their knowledge of what’s involved and, more specifically, the lenders who are good at managing this type of application and their criteria.”
She added: “Incorporating portfolios isn’t going to be the best move for all landlords so we’d always recommend that they seek professional advice, typically from a tax adviser or accountant.”
