Landlords are shifting their properties into limited company structures to beat the taxman and boost their rental income, according to new research.

More and more landlords are choosing to manage their properties through limited companies, a trend that’s been on the rise for the past four years. This move allows them to take advantage of tax benefits and run their operations more efficiently, particularly in the current uncertain economic climate.

The Big Shift to Limited Companies

Research by Paragon Bank reveals a significant increase in the proportion of properties held within limited companies. Back in 2020, the average landlord using a limited company structure had just 48% of their portfolio incorporated. Fast forward to today, and that figure has rocketed to 81%!

And it doesn’t look like this trend is slowing down anytime soon. A massive 67% of landlords planning to expand their portfolios in the next year intend to do so through a limited company. This is a huge jump from 2020 when only 45% were considering this option.

Experienced Landlords Leading the Way

It seems the more experienced you are as a landlord, the more likely you are to embrace the limited company structure. Landlords with four or more buy-to-let mortgages are far more likely (37%) to use limited companies compared to those with just one to three properties (15%).

Brokers Predict Continued Growth

Mortgage brokers are also seeing this trend firsthand. A recent report by Paragon Bank found that 60% of brokers expect to see an increase in business from portfolio landlords using limited companies over the next year.

Why the Rush to Limited Companies?

Louisa Sedgwick, Managing Director for Mortgages at Paragon Bank, explains that landlords are increasingly turning to limited companies to soften the blow of tax changes introduced back in 2016.

“Landlords have increasingly used limited companies to mitigate the impact of tax changes phased in from 2016. This has accelerated in recent years as more landlords have looked for ways to run their businesses more efficiently amidst a challenging economic environment.”

Is a Limited Company Right for You?

While incorporating your property business can offer significant advantages, it’s not the right solution for everyone. It’s crucial to seek professional advice from a financial or tax advisor to determine if it’s the best fit for your individual circumstances.