An interesting survey of almost 1,400 private rental sector landlords has revealed that more numbers are looking into shifting their property investments into limited companies.
The research was conducted by BDRC on behalf of Paragon Mortgages and was conducted to gauge reaction on how increased stamp duty and cuts to tax relief has changed the buy-to-let market.
Moves
Of the respondents, 41% said that they are thinking of moving their portfolio into a limited company as a direct result of the changes. 5% said that they have already founded limited companies.
For landlords with 20 or more properties, 14% are already operating as limited companies, with a huge 63% saying they are considering this move.
43% of landlords questioned said that stamp duty rises will affect their investment plans in the next two years.
More residential landlords considering limited companies
Demand
Despite rising uncertainty about the impact of tax relief changes and increased stamp duty, tenant demand is still extremely high.
In the final quarter of 2015, demand for rented accommodation was highest in the South West, with 40% of landlords reporting an increase. However in the North West, just 24% of landlords said they experienced more demand in the same period.
Competition
John Heron, director of mortgages at Paragon, noted, ‘recent Government interventions into the buy-to-let market are now beginning to impact landlord sentiment and plans. The fundamental drivers of the market however-tenant demand and yields-remain strong so there are competing dynamics in play.’[1]
‘It is interesting to see that concern about the impact of changes to stamp-duty and tax relief is greatest among larger landlords,’ Heron continued. ‘This concern is likely to grow now that the Government have confirmed that landlords with larger portfolios will have to pay the increased rate of stamp-duty on buy-to-let purchases.’[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2016/4/landlords-move-towards-limited-companies