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Limited Companies Increasingly Favoured by Landlords
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The option of limited companies is becoming an increasingly popular choice for landlords, according to a report for specialist lender Precise Mortgages. The research was compiled from the BDRC’s Q1 2018 Landlords Panel, looking at a sample of 1,043 National Landlords Association members.
Nearly 2 out of 5 (38%) landlords plan to use a limited company over the next 12 months to purchase properties. This is in comparison to 28% continuing as individuals.
This research also shows that landlords with more than four properties are specifically showing an interest in the usage of limited companies, seeing a rise to 42%, whereas those with up to three properties have dropped to 31%. Precise Mortgages have stated that landlords operating in London are most likely to be those considering the purchase of a property through a limited company.
According to the results of a recent study (conducted by Pure Profile), 89% of brokers expect an increase in the number of landlords setting themselves up as a limited company. The option to continue to claim tax relief on mortgage interest is seen as the main motivation. The research involved 104 mortgage brokers specialising in buy-to-let products.
In response to the BDRC study, around 15% of landlords answered that they had plans to expand their portfolios in the next year, within an average investment of two new properties. Around 23% of those planning to buy responded that they plan to add three or more properties to their portfolio.
BDRC’s research also revealed that landlords in possession of a larger portfolio are more aware of the Prudential Regulation Authority (PRA)’s lending criteria and portfolio application changes. 45% of the landlords involved are aware of these changes, and of those with four or more Buy-to-Let Mortgages, 67% are aware. The results do show, however, that 74% of those with larger portfolios feel that the changes have made it more difficult to secure BTL finance.
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.”
“The contrasting levels of awareness of the PRA’s recent changes to lending criteria and the application process between small and larger portfolio landlords points to the growing professionalisation of the latter group who stand to be the most affected.”
The option of limited companies is becoming an increasingly popular choice for landlords, according to a report for specialist lender Precise Mortgages. The research was compiled from the BDRC’s Q1 2018 Landlords Panel, looking at a sample of 1,043 National Landlords Association members.
Nearly 2 out of 5 (38%) landlords plan to use a limited company over the next twelve months to purchase properties. This is in comparison to 28% continuing as individuals.
This research also shows that landlords with more than four properties are specifically showing an interest in the usage of limited companies, seeing a rise to 42%, whereas those with up to three properties have dropped to 31%. Precise Mortgages have stated that landlords operating in London are most likely to be those considering the purchase of a property through a limited company.
According to the results of a recent study (conducted by Pure Profile), 89% of brokers expect an increase in the number of landlords setting themselves up as a limited company. The option to continue to claim tax relief on mortgage interest is seen as the main motivation. The research involved 104 mortgage brokers specialising in buy-to-let products.
In response to the BDRC study, around 15% of landlords answered that they had plans to expand their portfolios in the next year, within an average investment of two new properties. Around 23% of those planning to buy responded that they plan to add three or more properties to their portfolio.
BDRC’s research also revealed that landlords in possession of a larger portfolio are more aware of the Prudential Regulation Authority (PRA)’s lending criteria and portfolio application changes. 45% of the landlords involved are aware of these changes, and of those with four or more Buy-to-Let Mortgages, 67% are aware. The results do show, however, that 74% of those with larger portfolios feel that the changes have made it more difficult to secure BTL finance.
Alan Cleary also commented: “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.”
“The contrasting levels of awareness of the PRA’s recent changes to lending criteria and the application process between small and larger portfolio landlords points to the growing professionalisation of the latter group who stand to be the most affected.”
