TMW Report Reveals Trends in Landlord Limited Company Sector

by | Monday 13th May 2024 | Mortgage News

Data revealed by the latest Limited Company Landlord Report from TMW

Data revealed by the latest landlord limited company report from TMW

On Friday we were sent the latest landlord limited company report from The Mortgage Works (TMW), the buy-to-let arm of Nationwide Building Society. The report sheds light on the dynamics within the limited company landlord segment of the UK’s buy-to-let (BTL) market. The findings indicate significant contrasts between limited company landlords and those operating as individuals. If you are a buy-to-let landlord and are considering a limited company mortgage, the findings of this report are certainly something to make note of. In this blog, we will go through some of the most interesting findings.

Landlord Limited Company Reliant On Mortgage Borrowing

According to the report, limited company landlords are increasingly reliant on borrowing to finance their rental portfolios. A staggering 63% of them use borrowed funds, with 32% having borrowing on all their properties. On average, these landlords hold 5.6 BTL loans, amounting to approximately £1.5 million in debt, with a typical loan-to-value ratio of 55%.

One notable trend highlighted by the report is the growing prominence of limited company landlords in the mortgage market. TMW predicts that limited companies will account for 22% of new borrowing and product transfers in the next 12 months. This suggests a shift towards corporate structures for property ownership.

Are Limited Company Landlords Buying Or Selling In 2024?

Limited company landlords also exhibit optimism regarding their rental prospects, with 25% intending to buy and 30% intending to sell within the next year. This indicates an active approach to portfolio management, potentially driven by market opportunities and economic conditions. But also perhaps worryingly, a lack of confidence in the resilience of the rental market, if landlords are considering selling.

Furthermore, limited company landlords manage portfolios around three times larger than those operated by individuals, with the share of limited company properties nearly doubling in the last four years. A significant portion (32%) of these landlords hold all their properties within a limited company, demonstrating a preference for this ownership structure. According to the report, financially, limited company landlords tend to have higher value portfolios and generate more gross rental income compared to individual landlords. The report notes that they achieve a slightly higher yield, averaging at 6.6%. These favourable metrics could be attributed to the scalability and tax advantages associated with corporate ownership.

The Average Limited Company Landlord

On the demographic front, the typical limited company landlord is 59 years old, with around 18 years of experience in property letting. They are also more likely to operate full-time as landlords, indicating a dedicated commitment to their property investments.

Implications For The UK Buy-to-Let Market

In our eyes, the findings of TMW’s report carry several implications for the broader buy-to-let market in the UK. The increasing prevalence of limited company landlords suggests a shift towards professionalization and institutionalization within the sector. This trend could lead to greater competition and potentially reshape market dynamics, influencing everything from property prices to rental yields.

Additionally, the reliance on borrowing among limited company landlords underscores the importance of mortgage financing in driving portfolio growth and expansion. As such, mortgage providers and brokers clearly must adapt and develop what they offer to cater to the specific needs of this emerging demographic.

Oportfolio Mortgages: Helping You To Secure The Right Limited Company Landlord Mortgage

At Oportfolio Mortgages, we understand the unique challenges and opportunities facing limited company landlords in today’s market. Our team of experienced mortgage advisors specializes in helping clients navigate the complexities of property financing, offering personalized advice and solutions tailored to your individual needs.

Whether you’re looking to expand your portfolio, refinance existing properties, or explore new investment opportunities, we’re here to help. With access to a wide range of mortgage products and lenders, we can guide you through every step of the mortgage process, ensuring you secure the best possible terms and rates. Contact us today to speak with one of our expert advisors and take the next step towards achieving your property investment goals.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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