Record number of buy-to-let companies established in 2023

Key Points:

  1. Record Number of Buy-to-Let Companies in 2023:
    • Despite a decrease in landlord property purchases, the UK witnessed a record 50,004 new buy-to-let companies established in 2023, surpassing the 2022 figure of 48,520.
  2. Shift Towards Limited Company Structures:
    • The trend reflects a shift towards limited company structures for property holding, especially in response to tax changes since the end of 2016.
    • This structure is increasingly popular among landlords facing higher mortgage rates.
  3. Total Properties Owned by Buy-to-Let Companies:
    • The total properties owned by buy-to-let companies in the UK now stand at 615,077, marking an 82% increase from the end of 2016.
  4. Buy-to-Let Mortgages and Limited Companies:
    • While the overall number of buy-to-let mortgages decreased by 3% in the last year, mortgages for properties within limited companies rose by 10%.
  5. Rental Growth:
    • Significant rental growth was observed, with the average rent for newly let properties in Great Britain increasing by 10.2% year-on-year in December, the highest annual growth since records began in 2014.
  6. Reasons for Incorporating:
    • Existing landlords are moving properties into a corporate structure to shield themselves from higher interest rates.
    • The upfront costs associated with incorporating suggest a long-term commitment from landlords.
  7. Long-Term Outlook:
    • The number of buy-to-let incorporations is expected to continue running in the region of 40,000-50,000 for the foreseeable future.
    • The current tax regime could lead to half of all rental homes being held within limited companies, reducing the existence of landlords owning buy-to-lets in their personal name.
  8. Rental Market Pressures:
    • Pressures on the rental market show few signs of abating, with rental growth being more persistent than wider inflation.
    • Higher interest rates contribute to significant costs for landlords, impacting rental market dynamics.
  9. Market Outlook:
    • Slightly lower mortgage rates in 2024 are expected to alleviate some pressures on the rental market, but tenants may continue facing larger rent increases than pre-Covid.

The data reflects ongoing trends in the buy-to-let market, including the influence of tax considerations and the impact of interest rate changes on landlord behavior.

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1 Comment

  1. Paul Feeney

    I can’t understand why everyone does do it. Yes there is an up front cost, but without paying stamp duty and just legal fees, companies save capital gains tax, income tax and mortgage interest offset allowances.
    I was suspicious when looking in to the complexities but it has been well worth it so far!

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