One in five rental homes are owned by a company landlord, that’s according to the latest Countrywide plc Monthly Lettings Index published 18 April 2017.
“In Q1 2017 the proportion of homes let by a company landlord (landlords who own their property through a limited company) reached a record high of 20%”, a 6% increase over Q1 2016 says Countrywide.
Changes introduced by the government to tax relief on rental properties owned by individuals (Section 24) and commencing April 2017 is encouraging more landlords to buy and own homes through a limited company the property agent claims.
In London this proportion is even higher at 27% of residential properties let and owned through a limited company.
Meanwhile the Index says rents in Great Britain fell 0.3% compared with March 2016 to stand at and average of £928 pcm
The numbers of company owned rentals have been rising steadily since 2013 but Q1 2017 recorded the biggest annual jump (6%).
The changes to income tax relief on mortgage interest payments are being phased in over a four year period (until 2020) and took effect from this month (6 April 2017). They make it more tax efficient in some cases for landlords to own their buy to let portfolios through a company rather than hold as a personal asset.
Commenting Johnny Morris, Research Director at Countrywide, said:
“The number of rented homes owned through a company is on the 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.
“Rents fell again in March, mostly driven by falls in London. Stock growth continues to outpace demand in the capital, giving tenants more negotiating power, pushing down rents. In much of the rest of the UK rents continued to grow, although at a slower rate.”
There are uncertainties that anyone considering incorporation has to deal with. Seek advice from a qualified tax accountant before making any decisions.
Countrywide – 20% of homes let by Ltd Company https://t.co/Fuvo7Kt7pX
— LandlordZONE (@LandlordZONE) April 20, 2017