The number of landlords incorporating their property portfolios through limited companies has more than doubled since early 2020, according to new research by Pegasus Insight on behalf of Paragon Bank. This growing trend reflects a shift in how landlords are structuring their investments, with tax benefits and financial flexibility driving the change.
Incorporation gaining ground among larger portfolios
As of the third quarter of 2024, 76% of incorporated portfolios are held by landlords using a mix of individual and limited company ownership. This marks a significant rise from 36% in Q1 2020, with the average incorporated portfolio now comprising 13.1 properties—up from 6.3 properties at the start of the decade.
The research also revealed that limited company ownership is more prevalent among landlords with larger portfolios. While only 7% of landlords with one to three buy-to-let properties have fully incorporated their holdings, this figure jumps to 28% for landlords with four or more properties.
Louisa Sedgwick, Managing Director for Mortgages at Paragon Bank, noted: “The trend towards holding properties in limited companies doesn’t seem to be slowing down. In fact, these figures show that it’s actually growing amongst landlords who have found it can deliver benefits, particularly around how much their income is taxed.”
Individual ownership still dominates
Despite the rise in incorporation, 79% of landlords continue to hold their portfolios in their own names, with only 9% fully incorporating their properties under limited companies. This indicates that while incorporation offers distinct advantages, it is not the ideal solution for every landlord.
Sedgwick highlighted the importance of careful planning: “Incorporating portfolios isn’t going to be the best move for all landlords, so we’d always recommend that they seek professional advice, typically from a tax adviser or accountant.”
The research also pointed to opportunities for brokers, as Sedgwick explained: “Brokers can add another string to their bow by generally upping their knowledge of what’s involved and, more specifically, the lenders who are good at managing this type of application and their criteria.”
Balancing benefits with tailored advice
For landlords managing larger portfolios, incorporating properties into limited companies can offer significant advantages, particularly in terms of tax efficiency. However, the decision requires careful consideration of individual circumstances and long-term goals.
With limited company ownership rising steadily, landlords have the opportunity to explore a structure that aligns with their financial objectives. As the property market evolves, tailored advice and expert guidance will remain critical in helping landlords maximise their investments while navigating an increasingly complex regulatory landscape.
