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Landlords favour limited company status for new BTL purchases

07 June 2018
  • 38% of landlords will use limited companies to buy property in the next year
  • Landlords with bigger portfolios are the most likely to buy within limited companies
  • Awareness of PRA changes highest among larger portfolio landlords
  • Precise Mortgages strengthens its dedicated portfolio teams

New research* for the specialist lender Precise Mortgages reveals shows nearly two out of five (38%) landlords will use limited companies to buy properties over the next year compared to 28% as individuals, highlighting the continuing rise of the professional landlord.

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.

The findings underline the continued growth in popularity of limited companies among landlords. 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.

The specialist lender has a dedicated portfolio team and proposition to ensure the application process for brokers servicing professional landlords is straightforward. The team’s role is to do the heavy lifting for mortgage intermediaries and their customers, so the process is as efficient and smooth as possible. This has been supported by the launch of an online calculator and access to dedicated portfolio teams.

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. Less than half (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 BTL 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.”

“The contrasting levels of awareness of the PRA’s recent changes to lending criteria and the application process between small and larger portfolio landlords points to the growing professionalisation of the latter group who stand to be the most affected.”

“Precise Mortgages is currently one of the most recommended specialist mortgage lenders***, helping landlords to find solutions and supporting them through the process.”

Precise Mortgages offers an extensive range of Buy to Let products designed specifically for applications within limited companies. Full details are available at www.precisemortgages.co.uk.

*BDRC Q1 2018 Landlords Panel syndicated research report prepared for Precise Mortgages. Fieldwork was conducted online between 9th and 20th March among a sample of 1,043 National Landlords Association members

**Research conducted by Pure Profile among 104 mortgage brokers specialising in buy-to-let conducted between February 13th and 21st 2018

***Research conducted by BDRC Mercury, Q1 2018

For intermediary use only
BBR 0.75% / 3 month LIBOR 0.63%

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales with company number 06749498. Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD. Copyright © Precise Mortgages 2018.