Limited company buy-to-lets increasing

Nearly two thirds of landlords – 64% – with four or more properties intend to use limited company status for new purchases this year, according to recent figures.

This compares to the 41% figure recorded in Q1 2018.

Meanwhile, 21% of landlords with four or more properties intend to buy more as an individual, according to the lender’s research.

While 44% of landlords across the market who plan to buy will use limited company status, just 17% of those with one to three properties share this intent.

According to the figures, limited company status is growing in popularity as the phased reduction in mortgage interest tax relief does not have an effect on limited company landlords.

The interest coverage ratio on limited company applications is also lower than for most individual landlord applications, adds the firm.

The BTL market is changing and the switch to greater use of limited company status is one aspect of the development underlining the increasing maturity of the sector. There are good reasons why limited company BTL is dominating the purchase market and it is expected that this will continue to be the case this year and next.

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