The growth in limited company ownership of buy-to-let property has been driven largely by a new generation of landlords entering the market with corporate structures already in place, according to new research from Paragon Bank.

A survey of more than 500 landlords, carried out as part of Paragon’s report How limited company ownership is becoming the new normal, found that 29% now hold all of their rental properties within a limited company.

A further 36% split ownership between personal names and corporate entities, meaning almost two-thirds of landlords, 65%, have established at least one Special Purpose Vehicle for their buy-to-let investments.

The data suggests that age is a significant factor in determining ownership structure. Among landlords aged 25 to 34, 57% of properties are held in limited companies, with the remaining 43% owned through a combination of corporate and personal names.

In the 35 to 44 age group, limited company ownership falls to 46%, with a further 39% held under mixed arrangements.

This pattern broadly continues as landlord age increases, with corporate ownership becoming progressively less common among older cohorts.

EXPERIENTIAL TRENDS

A similar trend emerges when landlords are grouped by experience rather than age. Those who have been active in the market for five years or less hold 80% of their portfolios within limited companies. The remainder is split between personal ownership at 11.5%, mixed structures at 7.5% and limited liability partnerships at 1%.

Among landlords with six to 10 years’ experience, the proportion of properties held in Special Purpose Vehicles drops sharply to 40%. This falls further to 21% for those with 11 to 20 years in the sector and just 16% among landlords with more than 21 years’ experience.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “In a bid to mitigate the impact of tax changes introduced in the latter half of the previous decade, the last 10 years has seen more and more landlords opt to hold their buy-to-let properties in limited companies.

“Interestingly, our research shows that younger and newer landlords are more likely to structure their portfolios this way and do so earlier on in their landlord careers.

“This is something we’ve seen more of and recent enhancements to our mortgage application system are supporting these landlords. We’ve streamlined applications for simple buy-to-let cases, significantly cutting the number of supporting documents we ask for and speeding up the journey.

“In part, I think that these landlords benefit from more advice and education on the benefits and key considerations than those who came before them.

“With some of our older, more experienced landlords perhaps eyeing retirement, helping the next generation of landlords to succeed is vital so this support can only be a good thing.”