Limited company structures becoming increasingly popular

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38% of landlords will use limited companies to buy properties over the next year compared to 28% as individuals, according to new research commissioned by Precise Mortgages.

Among landlords with more than four properties the percentage buying new property via a limited company rises to 42% while among those with up to three properties it drops to 31%.

Landlords operating in London are the most likely to be planning to purchase through a limited company.

According to recent research by Precise Mortgages, 89% of brokers expect the number of landlords setting themselves up as a limited company to increase with the ability to continue to claim tax relief on mortgage interest seen as the main motivation.

Around 15% of landlords questioned intend to add to their portfolios over the coming year buying an average of two new properties, the BDRC study found. Around 23% of those planning to buy will add   three or more properties to their portfolio.

BDRC’s research found landlords with larger portfolios are significantly more aware of the Prudential Regulation Authority (PRA)’s lending criteria and portfolio application process changes. 45% of all landlords are aware of PRA changes but that rises to 67% among landlords with four or more buy-to-let mortgages.

However, 74% of those with larger portfolios say the changes have made it more difficult to secure buy-to-let finance, underlining the growing demand for specialist lenders.

Alan Cleary, managing director of Precise Mortgages, said: “Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords.

“Given the predicted rise in landlords switching to limited company status this year, we can expect this trend to continue.”

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