Landlords are often opting to set up a limited company to benefit from more favourable tax rules
A record 50,000 limited buy-to-let companies were set up across the UK last year, despite a sharp fall in the number of homes bought by landlords.
The figure surpasses by 3% the previous record of 48,540 in 2022 (source Hamptons 2022)
As investors faced higher mortgage rates, limited companies set up to hold buy-to-let homes accelerated to benefit from more favourable tax rules.
Scotland recorded the largest pick-up, with an 8.4% year-on-year uplift in the number of new companies set up.
The South West and North East were the only two regions of the UK to record a small fall in the number of new limited companies.
A record 58% of limited company buy-to-lets in the North East were held in a company that was set up outside the region. This reflects how landlords from across the UK are targeting higher yielding buy-to-lets.
At the start of this year there are a total of 345,426 active limited companies designed to hold buy-to-let property, up 11.6% from 309,643 at the beginning of 2023.
Of the 615,077 limited company buy-to-let properties, 75% (458,838) have a mortgage charge against them.
Over the last 12 months, there was a 21.9% increase in the number of homes held in companies with a single property. This compares to a 3.8% increase in the number owning 20+ homes.
The number of homes being put into a corporate structure will remain high.
So despite last year’s slowing sales market, there was no let-up in landlords rushing to incorporate.
For as long as landlords continue rolling off cheap fixed-term mortgages onto rates which are twice or triple what they were paying, the number of homes being put into a corporate structure will remain high.
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