The level of landlords planning to buy their next buy-to-let property through a limited company is now at a three-year high following a substantial uplift from 50% during Q1 to 62% in Q2 2022, according to newly released data from Paragon Bank.
47% of landlords who own between one and five properties expect their next purchase to be through a limited company, rising to 78% amongst those with portfolios consisting of six or more buy-to-let homes.
The survey of over 700 landlords, undertaken by BVA BDRC, found in the next 12 months, 14% of landlords plan to purchase buy-to-let properties.
Of those who intend to expand their portfolios, 66% said that they plan to finance their next property investment through a buy-to-let mortgage, following an increase of four percentage points since the previous quarter. There has also been an increase in the proportion of landlords who plan to fund purchases by releasing equity from existing properties, up from 17% in Q1 2022 to 28% in Q2 2022. Conversely, purchasing outright using previously invest funds has decreased in popularity amongst those planning to buy, falling from 14% to 7% during the same period.
Richard Rowntree, Mortgages Managing Director for Paragon Bank said: “Since midway through the last decade, tax burdens on buy-to-let investment have increased significantly. Along with the recent rise in overheads bought about by increasing energy and maintenance costs, running a letting business has undoubtedly become more costly. It is unsurprising to see more landlords look for ways to reduce their costs, with incorporation being one option for some.
“Of course, purchasing buy-to-let property through a limited company may not be the best route for all landlords so it is important that we provide customers with the complete picture to enable them to make informed decisions.”