Why are more landlords buying through a limited company?

Purchasing buy-to-let property through a limited company can come with certain tax advantages, and the number of landlords choosing this route is continuing to climb.

Every year for the past three years, the number of buy-to-let landlords intending to purchase properties via a limited company structure has increased, according to the latest data released by Paragon Bank.

The survey, which was carried out by BVA BDRC, found that the number of landlords intending to buy in this way rose from 50% in the first quarter of this year to 62% in the second quarter, demonstrating how property investors are increasingly assessing their options for greater returns.

Almost half (47%) of landlords who own between one and five rental homes plan to buy their next one through a limited company, says Paragon. Portfolio landlords who own six or more properties are even more likely to buy in this way, with 78% planning a limited company purchase next time.

Landlords are still keen on UK property

Of the 700 landlords surveyed, 14% plan to buy a further buy-to-let property or properties over the next 12 months. Although some have been deterred by recent tax changes, many are still confident in the appetite and continued growth in the UK property market.

The buy-to-let mortgage market may have seen interest rates creeping up along with the mainstream market, but lenders have remained competitive and growing numbers of lenders are offering a range of buy-to-let products.

According to the survey, around two thirds of property investors will use a buy-to-let mortgage to fund their next purchase.

Meanwhile, almost a third (28%) will use equity from existing properties to fund their next buy-to-let purchase. This is up from 17% in Q1 2022, and could be an indication of the success property investors have seen in the capital appreciation of their rental homes.

The study also found that the number of landlords buying properties outright using previously invested funds was going in the opposite direction. In Q2, just 7% of people plan to buy in this way, compared with 14% last quarter.

Reduce costs through a limited company

Before considering setting up a limited company to purchase investment property, it is advisable to do thorough research to ensure this is the best and most cost-effective method based on your circumstances. Despite changes to some market conditions, it won’t be the right route for everyone.

Richard Rowntree, mortgages managing director for Paragon Bank, explained: “Since midway through the last decade, tax burdens on buy-to-let investment have increased significantly.

“Along with the recent rise in overheads bought about by increasing energy and maintenance costs, running a letting business has undoubtedly become more costly. It is unsurprising to see more landlords look for ways to reduce their costs, with incorporation being one option for some.”

He adds that, as it may not be the best decision for all customers, the bank offers services to help people make the “informed decisions”.

The tax burdens Rowntree refers to mainly centre around the Section 24 amendment to property tax rules, which began in 2017 and was gradually phased in. It means landlords can no longer deduct their mortgage interest payments in full from their income, so has affected some people’s tax bills.

For those operating through a corporate structure or limited company, the full interest amount can still be off-set against profits, and these are subject to corporation tax (currently 19%) instead of individual income tax, while a variety of reliefs are also available.

This can be particularly enticing for portfolio landlords or those in the higher income tax brackets, as these individuals can make bigger savings.

Sometimes, smaller landlords such as those with just one property, and those in the lowest income tax bracket, might not benefit as fully from setting up a limited company. Particularly for those who already own the property, this would involve effectively selling it to the company, which could incur stamp duty.

BuyAssociation can put you in touch with one of our partners for more advice in limited company structures. You can also browse our available property investment opportunities here, or contact us for more details. 

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT