Research commissioned by Paragon Bank has found that 70% of landlords planning to purchase a new buy-to-let (BTL) property intend to do so through a limited company.

A survey conducted in Q4 2024 among 789 landlords showed that 69% planned to buy property using a corporate entity. A quarter of respondents intended to purchase in their personal names, while the remainder were undecided.

The survey, carried out by Pegasus Insight, found that this was the second-highest recorded level of landlords opting for a limited company, following a peak of 74% in Q2 2023.

Despite this trend, 78% of landlords still own property in their personal names. Among landlords with four or more properties, 28% have placed all holdings in a limited company. Additionally, 13% hold a combination of personal and corporate-owned properties, with an average of 74% of their portfolios structured through a limited company.

The key reasons for adopting a limited company structure include tax efficiencies and financial planning. Of those using corporate ownership, 45% cited personal income tax impact as a major factor, 42% highlighted mortgage interest relief, 33% pointed to corporation tax rates, and 27% referenced inheritance tax planning.

For landlords not using limited companies, the primary barriers were the costs of transferring assets (52%), concerns about capital gains tax (32%), and the administrative requirements of running a company (31%).

Jason Wilde, head of mortgage sales at Paragon Bank, commented: “The trend towards limited company structures has accelerated in more recent years, mainly due to changes to mortgage interest relief, but also landlords considering Inheritance Tax planning.

“Over 80% of our customers are now purchasing within a limited company structure. As many of them operate as SMEs, adopting a business structure makes sense and is more tax efficient.

“Limited companies also benefit from an interest cover ratio of typically 125%, versus 145% for higher-rate taxpayers buying in personal name, so it broadens the availability of buy-to-let mortgage finance.”

The data suggests that landlords are increasingly considering corporate ownership as part of their investment strategies, balancing tax efficiency with regulatory and financial considerations.