29th April 2021

Property Wire - Limited Companies

More and more UK and international landlords are choosing to register as a limited company to enjoy more tax benefits. There were almost 229,000 buy-to-let companies registered alone in 2020.

Since tax laws changed for landlords in 2017 the number of buy-to-let incorporations has seen an increase of 128%. Between 2016 - 2020 there were more buy-to-let property companies set up than in the preceding 50 years combined.

Most popular companies founded in 2020:

1st - Consumer goods online

2nd - Buy-to-let property

London and the South East make up almost half of all incorporations set up in 2020 at 47%

So what are the pros and cons of registering as a limited company?:

✔️Able to offset 100% of the mortgage interest against profits versus 20% if the property is in your personal name

✔️Higher levels of tax relief and personal tax savings

✔️No income tax on retained profit allowing you to reinvest your cash

✔️Lower corporation tax vs higher income tax rate

❌Not right for everyone to purchase through a limited company

❌Post tax profits aren't as easily available

Property Industry Eye - Rental Demand

It comes as no surprise that supply and demand for rental properties is currently at a bit of a bottle neck throughout the UK. The rental market is experiencing a boom in demand for rental properties which is great for the economy however this is having an impact on rental fees as landlords register a high demand for their properties.

March has seen an increase in landlords raising rent from 49% in February to 60% in March whilst tenants registering with letting agents has continued to rise month-on-month for the last 3 consecutive months.

Successful rent negotiations between tenants and landlords have also taken a tumble, due to the high demand. It has been reported that the success rate has fallen to 1.7% in March compared to 2% in February.


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