The proportion of landlords who plan to purchase their next buy-to-let (BTL) property through a limited company has reached the highest level in three years, according to the latest data from Paragon Bank.
The survey, which was answered by more than 700 landlords and undertaken by BVA BDRC, shows that BTL investors who intend to purchase their next property utilising a limited company structure increased from 50% in Q1 to 62% in Q2.
Paragon Bank says the research 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%) among those with portfolios consisting of six or more BTL homes.
It also found that in the next 12 months, 14% of landlords plan to purchase BTL properties.
Of those who intend to expand their portfolios, 66% said that they plan to finance their next property investment through a BTL 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 to 28% in Q2.
Meanwhile, purchasing outright using previously invest funds has decreased in popularity amongst those planning to buy, falling from 14% to 7% during the same period.
Paragon Bank mortgages managing director Richard Rowntree says: “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 undoubtedly 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,” he adds.