min read

Goverment tax grab on landlords prompts a third to go 'limited'

companies house landlords incorporation

A third of landlords who own rental property in their personal name plan to incorporate their portfolio into a limited company structure within the next three years, according to Paragon Bank.

The mortgage specialist’s poll of more than 1,000 landlords found 37% were unlikely to make the switch, citing tax as the main barrier to incorporation (56%), followed by a lack of information on how to incorporate (36%) and fewer mortgage options available (26%).

Nearly a quarter (23%) own all their rental properties within a limited company structure, 31% hold a mix of personal name and limited company properties and 34% hold all properties in their personal name.

Paragon says there has been a clear shift in the structure of property ownership from when landlords acquired their first rental property, with 71% of them initially holding property in their personal names.

It says this suggests those landlords have moved towards the limited company option as they built their portfolios. However, many who own property exclusively within a limited company structure have done so from the off, explains managing director of mortgages, Richard Rowntree.

He says this is reflected in the demographic of this group, which is typically younger than those with personal name or mixed portfolios.

Adds Rowntree: “There is a clear desire for a large proportion of landlords with property in personal names to incorporate, but barriers persist, such as having to pay Stamp Duty and Capital Gains Tax.”

Paragon’s report also found that limited company ownership doesn’t necessarily translate to experience. While 46% of those who own property exclusively within a limited company have more than 11 years’ experience, 33% only have up to five years’ experience. Conversely, 85% of landlords who own property in their personal name have 11+ years’ experience.

Read more about the rise in landlords using limited companies.


Limited company
Paragon bank