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A third of unincorporated landlords planning limited company switch

A third of landlords who own rental property in their personal name are planning to incorporate their portfolio into a limited company structure, research from buy-to-let mortgage specialist Paragon Bank has found.

Paragon’s new report: The rise of the limited company landlord, found that 33% of those with rental property in their personal name intend to incorporate within the next three years, although 37% said it was unlikely that they would transfer their properties into a limited company structure.

Tax was the main barrier to incorporation, cited by 56% of those with property in personal name, followed by a lack of information on how to incorporate (36%) and fewer mortgage options available (26%).

Paragon’s report, based on a survey of over 1,000 landlords, found that nearly a quarter of landlords (23%) own all of their rental properties within a limited company structure, 31% hold a mix of personal name and limited company properties and 34% hold all properties in personal name.

There has been a clear shift in the structure of property ownership from when landlords acquired their first rental property, with 71% of landlords initially holding property in their personal names.

This suggests those landlords have pivoted towards the limited company option as they have built their portfolios, either through incorporation or acquiring new property in a limited company structure.

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