The growth in the appeal of limited company lending has been evident since 2016 when the 3% investor stamp duty surcharge came into force and the proportion of tax-deductible mortgage interest on buy-to-lets held in personal names began to be phased out. In fact, since the beginning of 2016 and the end of 2020, more companies were set up to hold buy-to-let properties than in the preceding 50 years combined.

This progression was recently highlighted in research from Hamptons which showed that there were a record number of new limited companies set up to hold buy-to-let properties in 2020. Last year there were a total of 41,700 buy-to-let incorporations, an increase of 23% on 2019. The numbers have more than doubled since 2016, rising 128%. This means that at the end of 2020 there were a total of 228,743 buy-to-let companies up and running, an all-time record.

In addition, the latest Buy-to-Let Rental Barometer by Fleet Mortgages revealed that there was a rise in property purchases via limited companies; in Q4 of 2019, half of all purchases by portfolio landlords were through a limited company, while this increased to 67% in the same period in 2020.

The appeal of landlords incorporating a limited company offering is still being driven by tax implications plus additional factors such as the number of properties they own, their personal financial situation, their property-related aspirations and future pension requirements.

The value of professional advice has also risen dramatically over the past few years and an increasing number of landlords are realising the benefits attached to this, so make sure you are well-positioned to discuss the pros and cons attached to a limited company offering and add real value to the broker–client relationship.