In Q2 2022, that proportion of landlords hit a three-year high
The proportion of landlords who plan to purchase their next buy-to-let property through a limited company has hit its highest level for three years, according to research undertaken on behalf of Paragon Bank.
A substantial uplift from 50% in the first quarter of the year to 62% in Q2 2022 has led to a three-year high in the proportion of buy-to-let investors who intend to purchase their next property utilising a limited company structure.
The research has highlighted 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 buy-to-let homes.
The survey of over 700 landlords, undertaken by BVA BDRC, found that in the next 12 months, 14% of landlords plan to purchase buy-to-let properties.
Of those who intend to expand their portfolios, two-thirds (66%) said that they plan to finance their next property investment through a buy-to-let 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 2022, to 28% in Q2 2022.
Purchasing outright using previous investment funds has decreased in popularity among those planning to buy, falling from 14% to 7% during the same period.
Richard Rowntree (pictured), mortgages managing director at Paragon Bank, noted that along with the recent rise in overheads bought about by increasing energy and maintenance costs, running a letting business had undoubtably become more costly.
“It is unsurprising to see more landlords look for ways to reduce their costs, with incorporation being one option for some,” Rowntree said.
“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.”