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More landlords use limited companies to buy

Monday 11 June 2018

Nearly two fifths of landlords (38 per cent) will use limited companies to buy properties over the next year compared to just over a quarter (28 per cent) as individuals, new research reveals.

Among landlords with more than four properties the percentage buying new property via a limited company rises to 42 per cent while among those with up to three properties it drops to 31 per cent.  

Landlords operating in London are the most likely to be planning to purchase through a limited company.
The findings underline the continued growth in popularity of limited companies among landlords according to Precise Mortgages, which commissioned the study.

Alan Cleary, managing director of Precise Mortgages, said: “Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords.

“Given the predicted rise in landlords switching to limited company status this year, we can expect this trend to continue.”

But is going incorporated always the right choice? Not necessarily, according to Simple Landlords’ guest blogger Tony Gimple, of Less Tax for Landlords. According to Tony’s latest blog for us, incorporation isn’t necessarily the Holy Grail…

Despite this, some 89 per cent of mortgage brokers questioned expect the number of landlords setting themselves up as a limited company to increase with the ability to continue to claim tax relief on mortgage interest seen as the main motivation.

 Around 15 per cent of landlords questioned intend to add to their portfolios over the coming year buying an average of two new properties, the study found. Meanwhile 23 per cent of those planning to buy will add three or more properties to their portfolio.

The research also found that landlords with larger portfolios are significantly more aware of the Prudential Regulation Authority’s  recent lending criteria and portfolio application process changes.

That certainly reflects Simple’s own research, suggesting it is the bigger and more professional landlords – or those aiming to get there – who are more aware of the changes in the market and positioning themselves for growth over the coming months. 

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