"The ability to secure full mortgage interest tax relief, which is not available when holding properties as an individual, is a clear incentive for the move towards limited company borrowing."
A third of all landlords intend to remortgage over the next 12 months, with portfolio landlords much more likely to do so within a limited company, according to research by BDRC on behalf of Foundation Home Loans.
When asked how they intended to remortgage, 53% said they would do so as an individual, 19% said they would do so within a limited company, while 17% said it would depend on their circumstances at the time. However, those landlords with 11-plus properties were much more likely to remortgage within a limited company structure, with over a quarter (26%) saying they would do so within the next year.
Foundation said it had also seen a considerable rise in the number of landlords remortgaging within limited companies and it anticipates that landlords who hold properties in their individual names may also seek to move them into a corporate vehicle at some point in the future.
Landlords planning to purchase are much more likely to do so via a limited company vehicle. While only 14% of landlords said they would be seeking to purchase property over the next 12 months, over half of those (55%) would do so via a limited company.
Close to seven in 10 landlords said they would be using a buy-to-let mortgage to fund their next purchase, with the same number saying they used a mortgage adviser to arrange their most recent buy-to-let mortgage.
This number was higher for those with larger portfolios with 75% of those with 6-10 properties using an adviser and 72% of those with 11-19 properties.
Jeff Knight, director of marketing at Foundation Home Loans, said: “Understandably when it comes to remortgaging there is a continued shift towards the use of limited company vehicles particularly as we see the growth in portfolio and professional landlords who understand the advantages of holding their properties within such corporate structures. The ability to secure full mortgage interest tax relief, which is not available when holding properties as an individual, is a clear incentive for the move towards limited company borrowing.
“As a lender we’ve certainly seen a shift towards limited company business and our aim is to offer a competitive product offering, clear criteria and a smooth service for those landlords seeking to remortgage. It’s also clear that remortgaging remains the bedrock of the buy-to-let market and, because of that, advisers should be making regular contact with their existing clients in order to ensure they secure that repeat business, and they take advantage of the highly-competitive market that exists.”