The world of property is fast-paced, full of twists and turns, and ever-evolving.
According to research, the proportion of homes to rent in the UK owned by a company landlord rose to 20% in the first quarter of this year as more buy to let investors look to offset tax changes.
A record number of buy-to-let investors are switching to corporate structures following changes to the income tax relief on mortgage interest payments.
Delving deeper into the figures, research from Countrywide shows that one in five homes let out in the UK are owned by companies, an increase of 6% since the first quarter of 2016.
In The Big Smoke, 27% of properties let are owned by a company landlord, closely followed by Yorkshire and the Humber, where companies own 17% of let properties. In Scotland, the figure stands at 4%.
Encouraged to operate as companies by the detrimental tax relief changes on mortgages implemented last month, a number of landlords set themselves up in this way to make their businesses more economical, and efficient.
As a result of this shift, the number of landlords that own a property through a company has now reached its highest levels since records began in 2010. While numbers have been on the rise since 2013 the biggest jump, 4%, has been registered in the first three months of this year. A big change indeed.
The research also discovered that the most and least expensive homes on the market are likely to be owned by a company-based landlord. Over the last 12 months, a quarter of homes let by a company landlord cost less than £500 per calendar month while 9% let for between £1,500 and £2,000 were owned by a company landlord, compared to 6% owned by non-company landlords.
There has been a lot of speculation that losing mortgage interest relief will encourage landlords te hike up rents but reports show that rents are falling, with new lets down by 0.3% in March compared to a year ago.
Speaking openly on the subject, Johnny Morris, Research Director at Countrywide said, "The number of rented homes owned through a company is up. 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."
In certain circumstances buying a property as a limited company can work out to be more tax efficient, but it's important to remember this is not the case for all buy to let landlords. Cases are judged based on personal circumstances, income and the number of properties owned.
As these changes set in we expect to see more trends taking hold of the property sector and time will only tell what they'll be. One thing's for sure, we'll keep you in the loop.
Did you know? In today's world, energy efficient homes are a top priority for tenants? Find out more here with another installment of Property Patter.
Source via Source via Howard Worth and Mike Doherty of Howard Worth Accountants and Financial Advisors.
For more information on Howard Worth accountants and financial advisers, email Mike@howardworth.com or visit their website www.howardworth.co.uk