A growing number of UK landlords are opting to hold their properties through limited companies, a trend being driven largely by younger, newer investors entering the market, according to research from Paragon Bank.
The survey, which polled more than 500 landlords for Paragon’s report How limited company ownership is becoming the new normal, found that nearly one in three (29%) now hold their entire portfolios via a corporate structure.
A further 36% split ownership between personal names and corporate entities, meaning that roughly two-thirds (65%) of landlords have created at least one Special Purpose Vehicle (SPV) for their buy-to-let investments.
Paragon’s research highlights a generational shift in ownership patterns. Among landlords aged 25 to 34, 57% of properties are held in limited companies, with the remaining 43% under a mix of corporate and personal ownership.
EXPERIENCED LANDLORDS
Those in the 35-44 bracket are slightly less corporate-focused, with 46% of properties held through limited companies and 39% mixed, while the propensity to use SPVs declines further among older landlords.
The pattern is even clearer when looking at experience. Landlords with five years or less in the market hold 80% of their portfolios in limited companies. This falls to 40% for those with six to ten years’ experience, 21% for landlords with 11 to 20 years, and just 16% for those with 21 years or more.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, says: “In a bid to mitigate the impact of tax changes introduced in the latter half of the previous decade, the last 10 years has seen more and more landlords opt to hold their buy-to-let properties in limited companies.
“Interestingly, our research shows that younger and newer landlords are more likely to structure their portfolios this way and do so earlier on in their landlord careers.
“This is something we’ve seen more of and recent enhancements to our mortgage application system are supporting these landlords. We’ve streamlined applications for simple buy-to-let cases, significantly cutting the number of supporting documents we ask for and speeding up the journey.
“In part, I think that these landlords benefit from more advice and education on the benefits and key considerations than those who came before them. With some of our older, more experienced landlords perhaps eyeing retirement, helping the next generation of landlords to succeed is vital so this support can only be a good thing.”
