Between 2015 and 2022, the number of special purpose vehicles (SPVs) created for landlords to hold rental property within a limited company structure increased by 250%.

Last year, a record 48,540 SPVs were established to house rental property, according to industry data.

The driver of the growth? Government tax changes announced in 2015 that phased out the ability of landlords to offset mortgage interest payments against their rental income from 2017.

In our new report, The rise of the limited company landlord, we examine the profile of limited company landlords, the key benefits to them of a limited company structure and their future purchase intentions.

Based on a survey of over 1,000 landlords, we also investigate the appetite for unincorporated landlords to move their properties to limited company status, and the barriers preventing them from doing so.

The report finds:

• 23% of landlords hold all property in a limited company structure, 31% have a mix of limited company and unincorporated and 34% hold property exclusively in personal name
• 71% of landlords purchased their first property in personal name, suggesting many have pivoted towards limited company ownership
• 73% of landlords plan to purchase their next property in a limited company structure
• Landlords who own property via a limited company are more likely to be younger and have less experience than those who own property in personal name, reflecting the more recent popularity of limited company structures

The report also examines the behaviour of those landlords who continue to hold all property in personal name. Our survey found that 33% are planning to move their portfolio into a limited company structure, with 61% of that group already taking steps to achieve this.

However, barriers to incorporate persist, with 37% saying it is unlikely that they will incorporate property. Tax was the main barrier to incorporation, cited by 56% of those with property in personal name, followed by a lack of information on how to incorporate (36%) and fewer mortgage options available (26%).

Paragon Bank Managing Director of Mortgages, Richard Rowntree, says: “While limited company ownership has traditionally been associated with portfolio landlords, our research shows the next generation of portfolio landlords are adopting this approach from the outset.

“Acquiring properties within a limited company structure from an earlier stage will become the norm, as brokers become more experienced in limited company lending and understand their customers’ portfolio ambitions.”