Landlords have been steadily incorporating a larger portion of their property portfolios into limited company structures over the past four years, according to research by Paragon Bank. The shift is particularly pronounced among more experienced property owners with larger portfolios.

In a report for the second quarter of 2020, just under half (48%) of the average landlord’s portfolio using a limited company was incorporated. By the same period in 2024, this figure surged to 81%, indicating a clear trend toward the use of company structures for property ownership.

Research conducted by Pegasus Insight suggests that this trend is set to persist. Of landlords planning to purchase additional properties in the coming year, 67% intend to do so through a limited company, a significant rise from 45% in 2020. In contrast, only 31% plan to buy in their personal name, down from 36% during the same period.

Paragon Bank attributes this shift primarily to seasoned landlords, with the strategy becoming more prevalent as portfolio sizes increase. Among landlords with four or more buy-to-let mortgaged properties, 37% use limited companies, compared to just 15% of those with one to three properties.

Supporting this trend, Paragon’s Mortgage Intermediary Insight Report (MIIR) highlights similar findings among mortgage brokers. The bank’s latest report, published in the summer of 2024, revealed that 60% of brokers expect continued growth in business from portfolio landlords using limited company structures over the next 12 months. This follows an 11 percentage point rise in broker sentiment since the first quarter of 2024.

Louisa Sedgwick, managing director for mortgages at Paragon Bank, noted that landlords are increasingly turning to limited companies to offset the impact of tax changes introduced since 2016. “This strategy has accelerated as landlords seek to operate more efficiently in a challenging economic environment,” she said.

Sedgwick added that while the trend is growing, 78% of landlords still hold properties solely in their personal names. She emphasized the importance of professional advice, stating, “Incorporation isn’t necessarily the best option for every landlord, but it does present an opportunity for those looking to optimise their business.”