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Are you ready for the limited company landlord?


If you plotted on a graph the number of landlords switching from private buy-to-let ownership to a limited company, the curve upwards would be undeniable. The trend stems from the introduction of mortgage interest tax relief (Section 24) tapering back in 2015, with a prominent swap noted back in 2017, when buy-to-let-mortgage lenders saw a huge rise in applicants listing themselves as limited companies.

Fast forward to 2019 and current analysis by Hamptons International reveals more than one in ten rental properties are now let by ‘professional’ company landlords – that’s 12% of buy-to-let properties owned by a limited company – up from 9% in 2015 and the highest level since 2011. What’s more, limited company status isn’t a trend that’s going to ebb away – it’s becoming a serious option for an increasing number of landlords.

In fact, it has been reported that, among landlords who intend to buy more investment properties in 2019, 64% with four or more properties, and 44% of those with smaller portfolios, will do so through a corporate structure.

Next year is a milestone in buy-to-let ownership, with the mortgage interest tax relief reduction taking full effect and corporation tax rates reducing to 17% by April 2020. Landlords will feel the full effects of punitive measures for the first time and with income squeezed, the thought of limited company status will be more appealing than ever.

How can agents help company landlords?

Letting agents need to be aware that for its benefits, changing to a limited company isn’t a simple switch and it needs careful management – and this is where letting agents can help. Arming yourself with the knowledge and skills needed to help transitioning landlords can generate new business and allow agents to specifically target a growing sector in the PRS. It’s worth noting that there is a difference in the paperwork attached to limited company landlords – of which ARPM is already fully versed with – as well as different rules on running a company, and filing accounts and returns.

Agents can also work with a financial advisor to create a full ‘limited company landlord’ package, as mortgages can be harder to secure and more expensive under a company structure.

We’re in a lettings age where expecting business to come knocking isn’t an option. Proactive agents who monitor trends and shape their agency accordingly will enjoy the most success. If attracting company landlords is something you’d like to explore, contact ARPM today to discover how we can help.

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