The total number of homes rented by company landlords has hit record levels. One in five residential buy-to-let properties are owned by companies.
This represents the biggest year-on-year (YoY) increase on record, with the figure rising 6% since Q1 2016.
Why become company landlords?
Buy-to-let landlords are increasingly transferring property portfolios into limited companies. They do this as a means of achieving tax efficiency in light of regulatory changes to the buy-to-let market.
The changes will prevent landlords from deducting the entire cost of mortgage interest from rental income when calculating taxable profits. This initiative is set to be phased in over a period of four years, coming into full force in 2020.
What is happening across the buy-to-let sector?
Johnny Morris, Countrywide’s research director, commented: “The incoming tapering of mortgage tax relief is likely driving the increase.”
“Companies are generally taxed more favourably, particularly with recent changes by government to tax relief, so in many cases landlords can make cash savings by operating through a company rather than as an individual.”
The two regions with the highest ratio of company landlords are London and Yorkshire and the Humber, with 27% and 17% of rental properties under company ownership respectively.
Elsewhere, average UK rental charges fell for the second month running. Rates in central London fell as much as 9.5%.
Both of these factors indicate that buy-to-let is facing a turbulent time. Stay ahead with specialist accountancy advice from 3 Wise Bears.