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Charting the rise of the limited company landlord
Driven by tax efficiencies, financial planning benefits, and expanded lending opportunities, the shift towards landlords holding properties within a limited company structure has become increasingly evident in recent years.
This was apparent in the recent Pegasus Insight Landlord Trends report for Q4 2024, which reported an increased preference for incorporation among portfolio landlords. Currently, 22% of landlords own at least one property within a limited company, with 9% holding all their rental properties this way. While most landlords (78%) still own properties as individuals, those choosing to incorporate tend to have larger, more leveraged portfolios, averaging 10.6 properties per company.
Even more striking is how quickly the share of properties held within a limited company has grown. In Q1 2020, just 36% of properties owned by limited company landlords were held in this structure. By Q4 2024, this figure has more than doubled to 74%.
This shift towards limited company ownership is also shaping refinancing patterns. The report notes that 3 in 4 properties will still be refinanced in a personal name, reflecting the current ownership profile of most landlords.
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With such a substantial proportion of all new purchases being made within a limited company structure – and this percentage is only likely to rise - the direction of travel is clear; incorporation has quickly become the preferred choice for professional landlords looking to expand their portfolios.
According to NRLA Survey Insights within the Landlord Trends report, the top five perceived benefits for landlords incorporating are:
- Impact on personal income tax (45%)
- Ability to access mortgage interest relief (42%)
- Corporation tax rates (33%)
For balance, the top five perceived drawbacks of incorporating are:
- Cost of transferring assets into a corporate vehicle (52%)
- Capital gains tax uncertainty (32%)
- Administrative costs and effort of running a limited company (31%)
- 17% had never even considered the option.
For mortgage intermediaries, this data confirms a significant shift in how landlords structure their investments and how they will need to finance them moving forward, underlining the need for specialist support and guidance.
So, how can intermediaries help?
They can:
- Proactively inform landlords of the benefits and considerations of incorporation, helping them make informed decisions.
- Ensure they have full access to specialist mortgage products tailored for limited company structures, ensuring landlords can secure the most competitive and appropriate financing options.
- Help landlords navigate refinancing by comparing the advantages of personal vs. limited company refinancing, especially for portfolio landlords looking to optimise tax efficiencies and maximise investment potential.
By engaging landlords in these conversations, brokers can strengthen client relationships, build trust, and secure long-term business growth in an ever-evolving buy to let market. They should also not hesitate to lean on the support of specialist lenders, as there is a growing number of products aligned with common-sense criteria and underwriting policies that better accommodate the wants and needs of limited company landlords across the UK.
*This article was originally published on Financial Reporter
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