The number of buy-to-let properties held by limited companies has increased dramatically over the past decade, driven by young, new landlords buying properties within company structures from the outset.
This is according to a recent Paragon Bank survey of more than 500 landlords, which found that almost a third (29%) hold their properties exclusively through a limited company structure.
A further 36% of owners split ownership between corporate entities and personal names, and two-thirds (65%) have created at least one special purpose vehicle (SPV) for their buy-to-let investments.
Paragon’s research shows that a new generation of landlords is helping drive this shift, choosing LLC ownership from the start.
Among landlords aged 25 to 34, 57% of properties are held by limited companies and 43% are held in a mixture of corporate and individual names. Among the 35-44 age group, limited company shareholding drops to 46%, with a further 39% mixed, putting them just behind the youngest group in terms of SPV adoption, with this proportion generally falling as landlords age.
Echoing the pattern seen when dividing groups by age, LLC ownership is highest among new landlords but declines with experience.
Those who have been in the market for five years or less hold 80% of their portfolios in limited companies, with the remainder split between individuals (11.5%), mixed ownership (7.5%) and limited liability partnerships (1%). The proportion of property assistance in the SPV drops to 40% for landlords with 6 to 10 years of experience, to 21% for those with 11-20 years of experience, and to just 16% for the most experienced operators with 21 or more years of experience.
Commenting on the latest figures, Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “In an effort to mitigate the impact of tax changes introduced in the second half of the last decade, an increasing number of landlords have chosen to place their buy-to-let properties with limited companies over the past 10 years. Interestingly, our research shows that younger and new landlords are more likely to structure their portfolios in this way, and to do so early in their landlord careers.”
