A growing number of landlords are opting to purchase buy-to-let properties through limited companies, with nearly seven in ten (69%) planning to do so in the next 12 months, according to the latest research from Paragon Bank.
The survey of 789 landlords in Q4 2024 revealed a sharp increase in incorporation, with the proportion of landlords choosing the limited company route reaching its second-highest level on record—just behind the peak of 74% in Q2 2023.
Despite this shift, the majority of landlords (78%) still hold their properties in personal names. However, among those with four or more properties, 28% have fully embraced the corporate structure, while 13% maintain a mix of personal and company-owned assets.
Even in these mixed portfolios, an average of 74% of properties are held within business structures, reflecting a strong preference for incorporation among larger landlords.
TAX EFFICIENCY
The push towards limited company ownership is largely driven by tax and financial benefits. Nearly half (45%) of landlords using a company structure cite personal income tax mitigation as a key advantage, while 42% highlight mortgage interest relief. Corporation tax on profits (33%) and inheritance tax planning (27%) are also major factors influencing the shift.
ADMINISTRATIVE HURDLES
For those who have yet to adopt the corporate model, financial and administrative hurdles remain significant obstacles. Over half (52%) of landlords cited the costs of transferring properties into a limited company as the main deterrent. Capital gains tax uncertainty (32%) and the complexities of running a company (31%) were also named as key barriers.
With incorporation on the rise, landlords are clearly seeking ways to maximise profitability and financial efficiency in an evolving rental market. As tax policies continue to shape investment strategies, the trend towards limited company ownership is expected to remain a dominant force in the buy-to-let sector.
TAX PLANNING
Jason Wilde, Paragon Bank head of mortgage sales, says: “The trend towards limited company structures has accelerated in more recent years, mainly due to changes to mortgage interest relief, but also landlords considering Inheritance Tax planning.
“Over 80% of our customers are now purchasing within a limited company structure. As many of them operate as SMEs, adopting a business structure makes sense and is more tax efficient.
“Limited companies also benefit from an interest cover ratio of typically 125%, versus 145% for higher-rate taxpayers buying in personal name, so it broadens the availability of buy-to-let mortgage finance.”
