As rates rise and yields soften, the right ownership structure can make or break a landlord's returns
After two turbulent years following the UK’s 2022 mini-budget, the buy-to-let market is stabilising – and with it, brokers like Euan Stewart are seeing a renewed surge in investor interest. But today’s activity looks different from the boom years. More landlords are asking complex questions about whether to buy in their personal name or through a limited company.
“This year, we’re probably not quite at 2022 levels of buy-to-let activity, but we’re certainly getting there,” said Stewart, a mortgage broker operating under Perth Mortgage Centre. “The market is picking up, but clients need more guidance than ever.”
A business rebuilt after the bust
With over 30 years in financial services and two decades as a broker, Stewart has weathered many market cycles. His business – once 75% buy-to-let – was hit hard when the mini-budget sent shockwaves through the mortgage landscape. “The bottom fell out of the buy-to-let market,” he said. “It turned my business model upside down.”
Rather than rely on leads from the network he operates under, Stewart has built his business on self-generated referrals from solicitors, accountants, and repeat clients. “I don’t get any leads from the firm. All my work comes from professional connections and repeat business,” he said. “I like that I’m left to my own devices. No one’s breathing down my neck.”
The rising costs of incorporation
For landlords considering a limited company structure, Stewart is cautious but clear. “Limited company borrowing always incurs additional expenses – legal fees, personal guarantees, accountancy costs, and often higher mortgage rates,” he said. “Plus, your choice of lender is narrower.”
Transferring properties into a limited company can also trigger a series of tax events, including Scotland’s 8% Additional Dwelling Supplement. “It’s not a straightforward decision. What looks like a tax-efficient structure can come with big compliance obligations,” he said.
Stewart never offers tax advice himself. “You stray into dangerous territory if you do,” he said. “I always talk through the pros and cons with clients, then send them to their accountant – or we do a three-way call. The accountant must have the final say.”
Personal name vs limited company: What to consider
For basic rate taxpayers or those with just one property, incorporation may not be worthwhile, Stewart said. “You have simpler taxation, capital gains allowances, and fewer admin costs with personal ownership,” he said. But for higher-rate taxpayers or landlords looking to grow their portfolio, the benefits of incorporation – like full deductibility of mortgage interest and estate planning flexibility – can outweigh the costs.
“The key is understanding long-term goals,” he said. “Do they want to sell the properties before retirement or pass them on? That influences everything.”
He recounted a case where a client with 30-40 properties in personal names sought advice. “They had no idea about limited companies. Their accountant put together a report – cost them thousands, but the tax savings ran into the tens of thousands,” he said. “They used a phased LLP-to-limited company strategy. Without that advice, they’d be far worse off.”
Trends and investor shifts
Limited company ownership is no longer niche. “When I started, it was rare. Now it’s almost the norm,” Stewart said. He’s also seeing more landlords diversifying – exploring serviced accommodation and commercial property to spread risk.
But the challenges are intensifying. “Falling rental demand, especially in student markets, and rising mortgage rates are a bad mix,” he said. “Some landlords are selling off parts of their portfolio to reduce debt.”
And gone are the days of easy yields. “Now, property selection is critical. You can’t just buy any flat and expect it to rent. Landlords are being far more selective.”
Professional advice is non-negotiable
Stewart’s core message hasn’t changed: “Take proper professional tax advice.” Too often, clients rely on hearsay. “I had a young guy last night who was basing his plans on what his mates told him at the pub,” he said. “Turns out, one of those mates was a client of mine – he should’ve known better.”
Most limited company mortgages are only accessible through broker channels, giving advisers an essential gatekeeping role. “I hope most brokers are doing what I do – flagging the tax implications and pushing clients to get expert advice,” he said. “Because if they’re not, they shouldn’t be advising in this space.”
