A growing number of landlords are incorporating in order to salvage profits from the difficult buy to let sector, a bank says. 

Richard Rowntree, managing director for mortgages at Paragon Bank, says: “Industry data highlights an increase in BTL mortgages written to landlords operating as limited companies over the past five years, as a growing number seek to minimise the impact of tax policy changes introduced by government in 2017.

“Larger loans are often available to incorporated landlords and lenders typically assess interest coverage at a lower rate for limited company applications. 

This means that purchasing or remortgaging through a Special Purpose Vehicle (SPV) limited company structure can help to increase the chances of the deal working, something that takes on extra significance when affordability is tightened as we’re seeing across the market currently.”

According to research by Paragon Bank earlier this year more than six in 10 landlords planning to buy a new rental property advised that they would do so within a limited company structure.

This follows a five per cent increase compared to Q4 2022 and a year-on-year rise of 12 per cent to mark a return to the high reported in Paragon’s data for Q2 2022.

Landlords who intend to purchase as an individual have fallen by five per cent since Q4 2022 to 24 per cent.

Of those who plan to purchase within a limited company structure, 64 per cent have six or more properties.