Landlords are increasingly taking the limited company route, as 47,400 companies were established to invest in property in 2021, Hamptons research shows.
This is the largest number ever recorded, as last year half (50%) of new buy-to-let mortgages were taken out via a company.
Some 61% of the 269,300 current companies have been incorporated since April 2017, when landlords were told they would no longer be able to claim mortgage interest as an expense.
Aneisha Beveridge, head of research at Hamptons, said: “The way buy-to-let investors hold property has changed, with the impact of the tax changes made five years ago still shaping landlord buying behaviour today.
“But despite record numbers of rental homes being held in companies, the growth in buy-to-let businesses has come from smaller landlords rather than larger institutions who made up most buy-to-let company owners pre-2016.
“Today, only 20% of buy-to-let businesses hold more than three mortgaged properties, a similar profile to landlords who hold homes in their personal name.”
In terms of overall mortgage stock, 29% of buy-to-let mortgages are held via a limited company.
Covid seems to have driven some landlords out of the market, as 25,100 companies have been closed since the onset of the pandemic.
Hamptons has predicted the number of limited company purchases to fall in 2022.
Beveridge added: “The number of new buy-to-let incorporations in 2021 is probably close to its peak, with fewer likely to be set up in 2022. This is partly a product of last years’ stamp duty holiday which served to slow the fall in new investor numbers.
“Additionally, many investors who have wanted to make tax savings by transferring properties from a personal to a company name have had five years to do so.”
Average rents in all four Southern regions have surpassed £1,000 per month, meaning the North-South divide in the rental market has never been wider.
The recent recovery in London rents, coupled with strong ongoing growth across Southern England has seen the gap in rents between Northern and Southern England grow from 35% or £200 per month to 50% or £350 per month over the last decade.