Nearly two-thirds of landlords plan to use specialist purchase vehicles (SPVs) for future buy-to-let property purchases, research from Paragon Bank has found.
The study, part of Paragon’s How limited company ownership is becoming the new normal report, indicates that the rise in buy-to-let properties held through limited company structures over the past decade is set to continue. Younger and newer landlords are leading this trend.
A survey of more than 500 landlords found that 63% expect to make future property acquisitions through SPVs. The likelihood of using a limited company decreases with age:
100% of respondents aged 25-34 plan to use limited companies
82% of those aged 35-44
73% of landlords aged 45-54
54% of those aged 55-64
48% of respondents aged 65-75
The survey also revealed that around a third of landlords (32%) intend to transfer properties currently held in their personal names into a limited company structure in the future.
Paragon’s report highlighted that the use of limited companies among landlords has grown steadily throughout the last decade. One key influence is likely the removal of Section 24 in 2015, which ended landlords’ ability to deduct costs such as mortgage interest before paying tax on rental income.
“Our research shows how owning property via a limited company structure has become increasingly popular over the past decade, driven by changes in taxation," explained Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured).
“Nearly two-thirds of landlords intend to make future purchases through limited companies, so we expect the overall proportion of property held within a company structure to increase steadily in the coming years, particularly when you include those landlords who will incorporate existing property from their personal name.”
She added: “It’s encouraging to see that they will continue to adapt in this way, particularly the next generation of landlords who seem to have realised the potential benefits of this ownership structure early in their lettings business careers.”
