Number of buy-to-let ‘limited companies’ passes 300,000 for first time

The total number of companies set up by landlords to hold buy-to-let property has doubled since 2017 and now stands at over 300,000, research from Hamptons reveals.

This means that the total number of buy-to-let orientated companies has doubled over the last five years since 2017. The increase has been driven by new buy-to-let purchases being made in a company structure as well as landlords moving properties from personal to company names.

INTEREST RATES

The increase has been further underpinned by interest rates rising to 6% which mean the average higher rate taxpaying landlord with property in their personal name may face paying a £1,716 annual tax bill despite making a loss of £2,479.

Meanwhile the same landlord with a property held in a company structure would not pay any tax.”

Meanwhile the same landlord with a property held in a company structure would not pay any tax, limiting their annual loss to £1,604.  A lower rate taxpayer would face a loss of £763.

However, with rates above 5.0%, it’s likely that even limited company landlords could fall into the red when re-mortgaging or making a new purchase.

Landlords

Arround 40% of all new buy-to-let purchases are now made via a company structure, a record figure and one which is up from around 10% in 2016 before the Section 24 tax changes were tapered in.

Nationally, the average cost of a new let rose 6.9% over the last 12 months, down from 7.4% in August, with London leading the way.

In Scotland, where a rent cap was introduced for renewals, there were 60% fewer homes available to rent than in September 2019 – the largest fall in the country.”

Meanwhile nationally, September saw the first annual increase in the number of homes available to rent in five years.  Across Great Britain there were 14% more homes available to rent than in September 202, although this increase is from a period when stock levels were at record lows.