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Nearly two out of every five landlords are considering using private limited companies to buy further buy-to-let properties in the next 12 months. This compares to just one in four who are planning to acquire more properties as individuals, according to research by Precise Mortgages. Their study shows that 38% of buy-to-let landlords are planning to establish a limited company to reduce their tax bill. Only 28% are planning to purchase properties as an individual. This highlights a shift in the trends and way forward for the buy-to-let sector. Some of these changes are down to the new requirements for buy-to-let mortgages. About 42% of landlords with a portfolio of at least four properties with a mortgage are intending to buy further properties through a limited company, in order to meet these new requirements. As well as this, 31% who have up to three buy-to-let properties also intend to set up a limited company. Those most likely to go down this road are landlords who own properties in London.

Precise Mortgages managing director, Alan Cleary, said buying properties within the structure of a limited company is becoming more popular, particularly for professional landlords with a larger portfolio. This trend could continue, with 89% of brokers predicting the number of landlords setting up limited companies will continue to rise in the next year.

The fact that they are switching to company status and not selling up shows they have faith in the market. Further evidence that buy-to-let investment is a healthy option is that the share of buy-to-let mortgages stood at 13.9% of all new lending in the first three months of this year. Bank of England figures show that the number of new mortgages agreed by lenders dropped to their lowest level for two years. This was due to the number of first-time buyer loans falling. However, overall new mortgage lending was up 3.3% year-on-year, with £62.4 billion being borrowed, according to the data. Buy-to-let landlords secured 14.1% of new loans, which is up from 12.6% in the previous quarter. Connect for Intermediaries CEO, Liz Syms, said the sector is showing incredible resilience, despite the many changes in the past couple of years. She pointed out that despite these changes to regulations, taxes and HMO regulations, there are still good returns to be found in the buy-to-let sector.

It is felt that the sector is becoming increasingly professional, which is good news for both investors and tenants alike. People who ‘fell’ into the rental market or felt it was an easy option to make money have left the market following these changes. Professional landlords with well-run properties and high standards continue to make profits and are seeking to expand their portfolios. Ms Syms believes that it could well be that they have hit the bottom of the market and things are shifting upwards again. The fact that fewer first-time buyers are seeking mortgages also means there is still an increasing demand for decent rental properties.

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