Buy-to-let limited company usage ‘hits record high’

The “ticking time-bomb” that former chancellor George Osborne placed around mortgage tax relief for buy-to-let investors has triggered a near doubling in limited company usage.

In fact, estate agents Hamptons International is reporting a record rise in the stock of homes being rented out by incorporated structures – 18%, up from 10% before Mr Osborne acted.

That means that nearly one in five homes let this year were owned by a company landlord – described by advisers at CMME as the “only way” to avoid the  ex-chancellor’s measures.

Unveiled at Summer Budget 2015, their effect was to introduce a four-year tapering (until 2020) on the relief that landlords – as individuals – could claim on mortgage interest costs.

“Companies are generally taxed more favourably, so in many cases landlords can make cash savings by operating through a company rather than as an individual,” Hamptons confirmed.

“The numbers have been steadily rising since the first half of 2015 when the[-then] chancellor announced changes to tax relief on rental properties in the 2015…Budget.”

Interestingly, the agency found that company landlords are more likely to rent out cheaper homes than individuals, with only 2% of ‘Ltd’ investors having a £2,000+ pcm letting.

Yorkshire & the Humber now has the highest proportion of rented homes owned by a company landlord, followed closely by the North West (20%), and then London (19%).