Foundation Home Loans has found that almost two-thirds of landlords are planning to make their next purchase with the help of a limited company.
This is up from 55% of those explored in the second quarter of 2019.
Director of marketing at Foundation Home Loans, Jeff Knight, said: “The rise in limited company usage by landlords shows no sign of tailing off, particularly as we have a more professional landlord community who recognise the benefits of using such a vehicle.
“It’s therefore perhaps no surprise to see a growing number of landlords signaling their intention to make their next purchase through a limited company, and as a lender it’s incredibly important that our product range reflects this, and we can offer advisers and their portfolio landlord clients access to quality products, an excellent underwriting process and a high level of overall service that taps into the needs of limited company borrowers.
“There has also been a notable uptick in limited company remortgaging at Foundation, and whether these are larger portfolio landlords or not, it’s quite apparent where the market has moved to and the growing need for limited company expertise.”
Landlords with portfolios of 11+ properties before would more likely purchase in a limited company, but now landlords with smaller portfolios are also willing to use the strategy.
Around 62% of those with one to 10 properties said they would purchase via a limited company next and 65% of those with 11+ portfolio would likely do the same.
26% of those landlords who want to purchase via other methods said they would purchase as an individual, up from 24%.
Only 8% said it would depend on the situation at the time, down from 13% while 6% said they would purchase in the name of a partner or spouse, a drop from 10%.
And the rest said they would either purchase using other methods or they just didn’t know.
The research also showed a potential step-change in the type of properties landlords were adding to portfolios and where they were likely to concentrate in the future.
HMOs continue to generate the highest rental yield for landlords at 6.5%, with 20% of landlords who have an HMO property within the portfolio.
Especially HMOs are very popular in Wales, where 31% of landlords have at least one in their portfolio. The East Midlands are on the second stage with 26%.