Landlords set to move investments to limited companies

The report, by BDRC Continental on behalf of Paragon Mortgages, found that as landlords prepare for increased Stamp Duty on buy-to-let purchases and cuts to landlord relief, 41% of landlords are considering moving their portfolio into a limited company.

A further 5% have already established limited companies. For larger landlords with 20 or more properties, 14% are already operating as limited companies, with 63% considering it.

A total of 43% of landlords surveyed believed that the Stamp Duty increase will affect their buy-to-let purchasing plans in the next couple of years. This rises to 63% for landlords with 20 or more properties.

However, demand for rental property remains high as 40% of landlords in the South West reported demand to be rising in Q4 2015. Landlords in the North East experienced the weakest demand, with just under a quarter reporting increased demand in that period.

John Heron (pictured), director of mortgages at Paragon, said: “Recent government interventions into the buy-to-let market are now beginning to impact landlord sentiment and plans. The fundamental drivers of the market, tenant demand and yields, remain strong so there are competing dynamics at play.

“It is interesting to see that concern about the impact of changes to Stamp Duty and tax relief is greatest among larger landlords. This concern is likely to grow now that the government have confirmed that landlords with larger portfolios will have to pay the increased rate of Stamp Duty on buy-to-let purchases.”

However, Rob Jupp, chief executive of Brightstar, said the results were unsurprising and, if anything, this figure may climb even higher.