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Record number of landlords planning to buy next property in Limited company
The popularity of owning buy-to-let properties though a limited company structure is evident and they have become increasingly prominent from both a tax efficiency perspective and in terms of lower levels of stress testing by many lenders.
This trend has been driven by the quality of advice on offer across the intermediary market, not to mention an even more professional approach on show across the sector. And this is a trend which is only likely to continue.
In fact, according to the Q2 2023 Landlord Panel research from BVA BDRC – in conjunction with Foundation Home Loans – almost three quarters (74%) of respondents are now intending to buy their next property within a limited company structure, a figure which represents a new high (+12% vs. Q1).
The report outlined that only 17% plan to purchase as an individual, a fall of 7% on the previous quarter and a whopping drop of 12% compared to Q4 2022. Those with larger portfolios remain significantly more likely to purchase in a limited company structure (63% of 6+ property landlords versus 37% of those with 1 – 5 properties).
Both the average portfolio size of landlords with at least one property in a limited company and the average number of properties held in a limited company structure have increased broadly in line with each other when compared to Q1 data.
The research showed that the average portfolio size for those with at least one property in a limited company rose to 16.9 from a Q1 2023 figure of 15.6 and a Q4 2022 figure of 14.9. When it came to the average number of properties held in a limited company structure, this was also on the increase - hitting 12.3 in Q2 2023, a rise of 0.6 from Q1 2023 and a significant upswing of 3.2 when compared to the Q4 2022 total of 9.1.
It will be interesting to continue monitoring these trends over H2 2022 as a greater number of accidental or amateur landlords may be looking to leave the market and with specialist lenders dominating the limited company lending space, we are certainly expecting plenty of activity in this area over the coming months.
FOR INTERMEDIARIES ONLY
