The proportion of landlords who plan to purchase their next buy-to-let property through a limited company has hit the highest level for three years.
A substantial uplift from 50% in the first quarter of the year to 62% in Q2 2022 has led to a three-year high in the proportion of buy-to-let investors who intend to purchase their next property utilising a limited company structure.
This is according to research undertaken on behalf of Paragon Bank which highlights how the propensity to incorporate tends to increase with portfolio size. Just under half (47%) of landlords who own between one and five properties expect their next purchase to be through a limited company, rising to over three quarters (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, two thirds (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 undoubtably 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.”
For further information contact:
Jordan Lott
Media Relations Manager
Tel: 0121 712 2319
www.paragonbank.co.uk
Notes to editors:
BVA BDRC surveyed 708 landlords during May and June 2022 on behalf of Paragon Bank.
Paragon lends to private individuals and limited companies and has mortgages suitable for single, self-contained properties, as well as HMOs and multi-unit blocks. Paragon can accommodate higher aggregate lending limits and more complex letting arrangements including local authority leases and corporate leases along with standard ASTs.
Paragon introduced its first product aimed at the professional property investor in 1995 and is a member of UK Finance, the Intermediary Mortgage Lenders Association (IMLA), National Landlords Association (NLA) and the Association of Residential Letting Agents (ARLA).
Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £13 billion of assets under management and manages over 450,000 customer accounts.
Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ.