"For mortgage intermediaries, this data confirms a major shift in how landlords are structuring their investments, and how they will need to finance them moving forward."
Driven by tax efficiencies, financial planning benefits, and expanded lending opportunities, the shift towards landlords holding properties within a limited company structure has become increasingly evident in recent years.
This was certainly apparent in the recent Pegasus Insight Landlord Trends report for Q4 2024 which reported an increased preference for incorporation among portfolio landlords. Currently, 22% of landlords now own at least one property within a limited company, with 9% holding all their rental properties in this way. While the majority of landlords (78%) still own properties as individuals, those choosing to incorporate tend to have larger, more leveraged portfolios, averaging 10.6 properties per company.
What’s even more striking is how quickly the share of properties held within a limited company has grown. In Q1 2020, just 36% of properties owned by limited company landlords were held in this structure. By Q4 2024, this figure has more than doubled to 74%.
A major shift in mortgage financing
This shift towards limited company ownership is also shaping refinancing patterns. The report notes that 3 in 4 properties will still be refinanced in a personal name, reflecting the current ownership profile of most landlords. However, professional landlords with four or more buy-to-let mortgages are significantly more likely to refinance within a limited company structure than consumer landlords (22% vs. 10%).
At the same time, 69% of landlords planning to buy another property intend to do so within a limited company structure, a significant rise from 53% in Q3. Only 25% plan to buy in their personal name, down from 38% in Q3, while 8% remain undecided and will evaluate based on market conditions.
With such a substantial proportion of all new purchases being made within a limited company structure – and this percentage is only likely to rise - the direction of travel is clear; incorporation has fast become the preferred choice for professional landlords looking to expand their portfolios.
Why are landlords incorporating?
According to NRLA Survey Insights within the Landlord Trends report, the top five perceived benefits for landlords incorporating are:
• Impact on personal income tax (45%)
• Ability to access mortgage interest relief (42%)
• Corporation tax rates (33%)
• Inheritance tax planning (27%)
• Created a family business (24%)
For the purpose of balance, the top five perceived drawbacks of incorporating are:
• Cost of transferring assets into a corporate vehicle (52%)
• Capital gains tax uncertainty (32%)
• Administrative costs and effort of running a limited company (31%)
• Stamp duty (including land transaction tax in Wales) (28%)
• Lack of knowledge/confidence on how to incorporate (23%)
I’ll also add a sixth here, as it’s relevant to the conversation: 17% had never even considered the option.
For mortgage intermediaries, this data confirms a major shift in how landlords are structuring their investments, and how they will need to finance them moving forward. Underlining the need for specialist support and guidance.
So, how can intermediaries help?
They can:
• Proactively inform landlords on the benefits and considerations of incorporation, helping them make informed decisions.
• Ensure they have full access to specialist mortgage products tailored for limited company structures, ensuring landlords can secure the most competitive and appropriate financing options.
• Help landlords navigate refinancing by comparing the advantages of personal vs. limited company refinancing, especially for portfolio landlords who are looking to optimise tax efficiencies and maximise investment potential.
By engaging landlords in these conversations now, brokers can strengthen client relationships, build trust, and secure long-term business growth in an ever-evolving buy-to-let market. And they should also not hesitate in leaning on the support of specialist lenders, as there is a growing number of products aligned with common-sense criteria and underwriting policies that better accommodate the wants and needs of limited company landlords across the UK.
