Small portfolio landlords lean into limited company purchases – Foundation

by:
  • 31/10/2019
  • 0
Small portfolio landlords lean into limited company purchases – Foundation
The number of landlords planning to buy their next property within a limited company has further increased, as smaller portfolio holders are now embracing the setup.

 

Research by Foundation Home Loans – undertaken by BVA BDRC and based on 888 online interviews – found almost two-thirds of landlords planned to buy using a limited company, up from the 55 per cent in Q2. 

Previously, landlords with larger portfolios of 11 or more properties were more likely to say they would purchase in such a manner, but now landlords with smaller portfolios are equally likely to use the strategy. 

Foundation’s research showed 62 per cent of those with one to 10 properties said they would purchase via a limited company next, compared to 65 per cent of those with 11 properties or more. 

Of those landlords who said they would purchase via other methods, 26 per cent said they would purchase as an individual, up from 24 per cent; eight per cent said it would depend on the circumstances at the time, down from 13 per cent and six per cent said they would purchase in the name of a partner or spouse, down from 10 per cent.  

The rest said they would either purchase via another means or they did not know.   

 

Still a minority 

Despite the shift, Foundation found 82 per cent of currently let-out properties were still held by individuals or groups of individuals, with 10 per cent held as a mixture of individual and company, and just six per cent held as part of a company.   

The research also looked at the actual number of sales and purchases made by landlords over the last quarter – seven per cent of landlords said they had moved property out of their portfolio during the last three months, while seven per cent said they had made a purchase.  

However, landlord’s intentions for next year may indicate portfolio downsizing – 13 per cent of landlords said they intended to purchase at least one property in the next 12 months, while 24 per cent said they intended to sell.  

 

Upturn in remortgages 

Foundation also said it anticipated a “significant rise” in the number of landlords remortgaging within a company and added it had already begun to notice an increase from larger portfolio landlords.  

The research revealed that 31 per cent – up from 27 per cent – planned to remortgage within the next 12 months.

Jeff Knight (pictured), director of marketing at Foundation Home Loans, 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.  

There appears to be a misconception that landlords are offloading property at a rate of knots but this is certainly not the case for the professional landlord, and we fully anticipate that once the political uncertainty is out of the way, that a large number of landlord borrowers will be seeking advice in order to ensure they can add to their portfolios.”

 

 

There are 0 Comment(s)

You may also be interested in

Read previous post:
Brexit worsening commercial property downturn as investors flee ‒ RICS

The number of surveyors who believe the commercial market is in a downturn phase has hit its highest level since...

Close