A greater switch to LC structures seems to be connected to the trend, as of those landlords, the average number of properties held within an LC in Q2 was 12.3, up from 11.7 in Q1 2023 and 7.8 in the final quarter of 2021.
Charles Breen, founder and director at Montgomery Financial, said portfolio landlords were now the dominant players, which, he said, reflected a growing trend toward greater professionalism in property investment.
"This shift has fuelled a substantial demand for limited company buy-to-let mortgages. The transition from occasional and unintentional landlords to more dedicated investors, who prefer limited company buy-to-let financing, has undeniably been instrumental in sustaining the market, particularly in the face of rising interest rates.
"Notably, there has been a noticeable uptick in landlords who own one or two properties opting to sell and exit the industry."
Riz Malik, founder and director at R3 Mortgages, said the benefits of holding property under a limited company framework "may be keeping high-rate and additional-rate taxpayers in the rental market".
Stephen Perkins, managing director at Yellow Brick Mortgages, agreed. He said: "Limited company products massively help the buy-to-let market, as despite rates for the products being higher, they benefit usually from a lower stress test on the rental calculation allowing more scope for borrowing needs.
"Also as a limited company, landlords can still offset the mortgage interest against their tax bill, which for larger portfolio landlords can be a massive saving on tax."
carmen.reichman@ft.com
