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More investors looking to offset tax changes by purchasing as ‘company landlords’





Over the last couple of years, investors in the UK’s private rented sector have faced change after change in terms of the hoops they have to jump through in buying and maintaining stock. Time and again, the government has moved the goalposts for investors in rental property, adding higher taxes for purchasing and removing some of the benefits that come with being a buyer.

However, the strength of the market means that landlords have not simply opted to back away from the thriving rented sector, and are instead continuing to look for new ways to invest that can save them money. One of the most popular tactics in this regard involves becoming a company landlord where investors register themselves as a limited company before buying.

It’s a strategy that allows buyers to make their operation more tax efficient, and it has been increasing in popularity for some time. And although there were no savings to be made in last year’s Stamp Duty shake up, it’s believed that owners can save on the mortgage tax relief rules change that came into effect on April 6th 2017.

This caused a swell in investment from buyers registered as limited companies in the early part of the year, and according to the latest report from Countrywide, as of the end of Quarter One of this year, 20 per cent of the homes to rent in the UK are now owned by company landlords as opposed to traditional individuals.

It means that the volume of owners of UK rental property who purchased through a limited company has jumped to its highest level since records began in 2010, while the four per cent rise recorded in the first three months of this year represents the fastest climb experienced in the UK since it first started growing in 2013.

Johnny Morris, research director with Countrywide, said the main reason for this change in activity in the rental market is that companies are able to save more in taxation terms than landlords themselves ever could.

“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,” he said.

Not all homes to rent are seeing rises in company landlord ownership, however. According to the study, it is the higher and lower ends of the market that are seeing growth in this regard. It said that a quarter of the homes let by company landlords come with a price of around £500 per calendar month, while nine per cent of those costing between £1,000 and £2,000 per month are owned by companies, compared to just six per cent owned by non-company landlords.

About Experience Invest

UK property consultancy, Experience Invest, is regularly featured in the news and provides expert insights into the real estate sector. Recently, Experience Invest has been featured in Property Industry Eye, Hallam FM, Property Week, Global Banking and Finance Review and Zoopla.