Increasing number of buy-to-let landlords switching to limited companies
Almost two out of five buy-to-let landlords will use limited companies to acquire properties over the next 12 months compared to just over a quarter as individuals, according to research by Precise Mortgages,
The study found that 38% of landlords plan to set up a buy-to-let limited company with a view to reducing their tax bill, compared to 28% who plan to buy property as an individual, highlighting the changing trend in the market.
Some 42% of portfolio landlords with four or more mortgaged buy-to-let properties intend to purchase new property via a limited company, owed largely to the fact that they have to meet new mortgage requirements, while 31% of those with up to three properties intend to set up a limited company.
Landlords with properties in London are the most likely to be planning to acquire property via a limited company, the research shows.
Alan Cleary, managing director of Precise Mortgages, commented: “Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords.”
Some property investors will find it unsurprising to find that almost nine out of ten – 89% – brokers expect the number of landlords setting themselves up as a limited company to rise over the next 12 months.
“Given the predicted rise in landlords switching to limited company status this year, we can expect this trend to continue,” Cleary added.