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Limited companies the new normal for landlords

limited company

The limited company buy-to-let model has continued to become the normal route for landlords, as there’s been a 23% rise in new companies set up so far this year, Hamptons research shows.

At the current rate between 60,000 and 62,000 limited companies will have been set up by the end of 2024, exceeding last year’s 50,004 total.

There are now 382,007 companies set up to hold rental property, 74% of which were incorporated since the start of 2016.

Aneisha Beveridge, head of research at Hamptons, said: “While landlord purchase numbers are well down on pre-pandemic levels, there’s been no sign of a slowdown in the number of companies being set up to put them in.

“Most new purchases are now made in a company structure. However, there’s also been a significant rise in the number of landlords moving homes they own in their personal name into a company to shelter from an increasingly aggressive tax environment.

“While the benefit of being able to offset mortgage payments before being taxed has been the primary driver for new incorporations over the last few years, more recently rumours of potential increases to Capital Gains Tax or Inheritance Tax are further fuelling the rise.

“An increase in personal tax rates will only widen the gap between the tax paid by landlords who own homes in their own name or a company name further.”

While the average rent for a newly let property in Great Britain hit a new high of £1,384 per month in September, the pace of growth continued to cool.

Average rents rose 4.5% year-on-year, down from 5.0% in August and 11.7% in September 2023.

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