Landlord limited company rush picks up pace

A large number of landlords have already changed the management vehicle for their property portfolios to a limited company, in response to the reduced mortgage tax relief available to individual landlords due to be phased in from 2017 to 2020.

Data recently published by Kent Reliance shows mortgage applications via limited companies increased by over 80% in 2015 compared to 2014. In 2015, more than a fifth of applications were through limited companies, compared to just 15% of applications in 2014.

This rush to incorporate has not abated in 2016. It has intensified, with numbers being exaggerated by the stamp duty stampede. In the first three months of the year, four in ten applications for Buy to Let mortgages have been via limited companies. Across the whole market, just under 38,000 limited company loans were issued in the period, nearly four times the 10,100 a year ago.

This trend is set to continue. A third of landlords surveyed for the Kent Reliance report were considering this move, and 7% have already done so. Professional landlords with larger portfolios (20+ properties) are much more likely to incorporate. Nearly half are thinking about taking this step, and 22% have already done so.

As landlords become increasingly aware of their options – not to mention begin to feel the impact of the changes on their tax returns from 2017 onwards – Kent Reliance believe incorporation will continue to grow in popularity and expect more than half of new loans to be made in this way by the end of this year.

The Buy to Let Britain Report (Edition 4) is published by Kent Reliance for Intermediaries.

If you are a landlord thinking of setting up a limited company, Judge and Priestley’s Commercial department can assist with company formation. Please contact us on 020 8290 0333.

http://www.judge-priestley.co.uk/site/contact/make-an-enquiry/