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A new report reveals a record number of landlords set up Limited Companies in 2023. What does this uptick in activity mean for the private rental sector? 

A new report by Hamptons reveals that landlords set up a record 50,004 Limited Companies in 2023, overtaking the previous high of 48,520 set up the year before.

This jump comes as the average rent on a newly let property rose by 10.2% in the year to December 2023, marking the strongest end-of-year growth since tracking of this measure began in 2014. It also surpasses the previous full-year rental growth high of 7.7% in the year to December 2022.

Property investors now own 615,077 properties in Limited Companies across the UK, an 82% increase since the Section 24 tax changes were announced at the end of 2016. These changes made Limited Companies a more profitable way for many higher-rate taxpayers to own investment property. Please speak to a professional tax advisor if you’re considering investing this way.

Conversely, the number of outstanding buy to let loans fell by 3% over the last 12 months, reflecting landlord hesitancy over increased mortgage rate pricing and confidence in the sector. However, despite this, mortgages on properties held in Limited Companies increased by 10% over the same period. With the vast majority of landlords looking to invest via a Company structure, it shows positive signs that many are focusing on the long-term benefits of property investments instead of the current challenges.

On a regional basis, a record 58% of Limited Company buy to let properties in the North-East were held in Companies set up outside the region. This is the highest proportion of any region and reflects how landlords are being more strategic in where they invest in property, targeting higher-yielding areas and not necessarily just properties in their local area.


The future of Limited Company buy to let mortgages

Head of research at Hamptons, Aneisha Beveridge, commented, “Despite last year’s slowing sales market, there was no let-up in landlords rushing to incorporate.

“Rather, the record number of companies set up to hold BTL homes suggests a long-term commitment from landlords – particularly given the upfront costs associated with incorporating.

“The growth has been driven mostly by existing landlords moving properties into a corporate structure to shelter themselves from higher interest rates. Meanwhile, the number of new landlords setting up shop has remained relatively muted. […] Longer term, the current tax regime could push half of all rental homes into a limited company, significantly reducing the existence of landlords who own buy to lets in their personal name.” 


Your next steps

Whether you’re looking to purchase through your existing Limited Company, set up a new SPV, or have questions about borrowing through this investment type, our expert mortgage makers can help.

As Limited Company borrowing becomes increasingly popular, it’s essential to work with a broker to ensure you secure the most competitive deal available to you. Speak to our buy to let team on 0345 345 6788 or get in touch here.

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